1 Stock to Buy, 1 Stock to Short: Gaming

These stocks offer two very different ways to play the gambling/gaming space

   

As smartphones become ubiquitous and online gambling becomes legal in more states, both pleasure and gambling gaming stocks have been thrown into the deep end to sink or swim. I’ve got one of each for you to profit from.

My Trending123 Pattern Scan powered by Recognia is one useful tool I have to scan the markets quickly, and it is showing two opposite technical events.

Buy the Continuation Diamond

4 19 13 sohu 300x190 1 Stock to Buy, 1 Stock to Short: Gaming
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Sohu.com
(NASDAQ:SOHU) is a Chinese online media and gaming company that has developed a continuation diamond in its stock over the past 76 days.

The price has broken upward out of a consolidation period, suggesting a continuation of the prior uptrend. The pattern begins during a downtrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price breaks upward out of the diamond’s boundary lines, it marks the resumption of the prior uptrend.

Recommendation: Buy SOHU for a $57.00 – $60.00 intermediate-term target, with a $43.38 stop.

Short the Top Triangle

4 19 13 sgms 300x192 1 Stock to Buy, 1 Stock to Short: Gaming
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Scientific Games Corp.
(NASDAQ:SGMS) provides the technology for lottery and gaming organizations worldwide. Its stock has developed a top triangle over the past 55 days.

The price seems to have reached a top, showing signs of reversal as it has broken downward after a period of uncertainty or consolidation. A top triangle shows two converging trendlines as prices reach lower highs and higher (or stable) lows. Volume diminishes as the price swings back and forth between an increasingly narrow range reflecting uncertainty in the market direction. Then well before the triangle reaches its apex, the price breaks down below the lower trendline with a noticeable increase in volume, confirming this bearish pattern as a reversal of the prior uptrend.

Recommendation: Buy SGMS for a $4.70 – $5.30 intermediate-term target, with a $10.00 stop.

 

InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the OpenParabolic Options and Trending123.  Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership. For more information on which service is for you click here.


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