Take-Two Interactive Software ( TTWO) was raised to a buy recommendation with a $165 price target Thursday by a prominent sell side firm. Let's check and see if the charts and indicators of the videogame giant are in agreement at this point in time.
In this daily bar chart of TTWO, below, we can see a decline to a low in May and then a higher low (so far) in late September. Prices are still below the declining 50-day moving average line and below the declining 200-day moving average line. The math-driven On-Balance-Volume (OBV) line shows a decline from February, telling us that sellers of TTWO have been more aggressive than buyers for several months now -- not a positive sign. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line but close to a cover shorts buy signal.
In this weekly Japanese candlestick chart of TTWO, below, we find some interesting clues. In May we can see a clear hammer pattern marking the price low. In September we can see a bottom reversal pattern. A bottom reversal pattern can mean a turn from down to up, but it can also mean a turn from down to sideways. TTWO is trading below the declining 40-week moving average line. This is a lagging indicator but it still defines the major trend. The weekly OBV line is pointed down but it is so far holding above its early May low. The MACD oscillator is below the zero line but improving.
In this daily Point and Figure chart of TTWO, below, we can see a nearby downside price target in the $105 area.
In this second Point and Figure chart of TTWO, below, we can see a potential price target in the $99 area. This would be a new low for the move down.
Bottom line strategy: In our Aug. 5 review of TTWO we did not favor the long side of the stock. Two months on and the charts are still not a table-pounding buy.
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