Take-Two Interactive Software, Inc. develops, publishes, and markets interactive entertainment solutions for consumers worldwide. The company offers its products under the Rockstar Games and 2K labels. It develops and publishes action/adventure products under the Grand Theft Auto, Max Payne, Midnight Club, and Red Dead names through developing sequels; offering downloadable episodes, and content and virtual currency; and releasing titles for smartphones and tablets. The company also develops brands in other genres, including the L.A. Noire, Bully, and Manhunt franchises.
Take a look at the 1-year chart of Take-Two (NASDAQ: TTWO) below with added notations:
Over the past month and a half, TTWO has moved into a sideways trading range commonly known as a rectangle pattern. The TTWO rectangle pattern has formed a resistance at $50 (red), which has been tested multiple times, and a $46 support (green). At some point the stock will have to break one of the two levels.
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The Tale of the Tape: TTWO is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $46 or on a hold above $50. The ideal short opportunity would be on a break below $46.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach