Up Up Down Down Left Right Left Right “B” “A” Select Start

Yeah, you know what I’m talking about.  That’s for 2 players!  And yes, everyone knows that “Spread” is the best gun, especially against that giant eye.

Anyway, the video-game industry is one great place to trade stocks.  Everyone everywhere plays games.  It’s a way where we can break down barriers, overcome racial prejudice… because when you’re playing Halo 3 online, it doesn’t matter what color your skin is, you just want to make sure that dude in some other country has got your back.

Everyone plays video games, even up at the Royal Palace.  Queen Elizabeth just got a golden Wii.  I’m not kidding.  It’s a pure pimped-out gold plated Wii, something you’d expect maybe in Jay-Z’s, Rob Dyrdek’s, or Danny’s living room. [source]

But yeah, that’s the old lady’s Wii.  Hope she doesn’t break a hip playing Rock Band.

Anyway, a couple of gaming stocks are coming to life again, so let’s get these video-game stocks back on our radars, because there definitely is some action going on now and in the future.

First off, since we are talking about Wiis (that looks funny when you pluralize it) let’s check out Nintendo’s chart…

NTODY.pk …. poor thing!  With all that sales, this stock just doesn’t get any love.  This stock is ripe for a trade though, I mean look at that steep triangle.  It’s either break up or down big time.  If you can, try play a strangle.

Here’ a gaming company you probably never heard of, but has a very trade-able chart.  I picked it up from The PPT.  SGMS has a nice trend line going up, but it’s been pretty common in almost all beat-down stocks.  Short under the trend line, long over it.  Why short under it?  Because it might start looking like GME’s stock..

Next up is GameStop, which does not look good…

Look at that nasty volume on that sell-off.  The question is, was it warranted?  Disappointing results as stock gets knocked off below the trend-line.  This will be a target for bears, so watch the shorts come in on a re-test of the trend-line.

Next up is TTWO.  Which, is approaching a heavy resistance point.  I like this company, but not the stock.  TTWO has talent in the gaming industry, but the problem on the investors’ side is that the trade is just too crowded.  It kind of reminds me of XMSR and SIRI… interesting and unique products, but bad stock.  I like this as a short above 10.

But not all gaming stocks are ugly.  The best gaming-related stocks are…… in China!  Yup, China, our wonderful fortune-cookie play on the market.  Did anyone decipher the second fortune cookie btw?  My two favorites had great earnings.  SNDA and NTES.  All you need to know about SNDA is that they have the Massive-Multiplayer-Online gaming industry cornered.  You figure China has 90 billion people, so if they each spent one dollar playing World of Warcraft that’s $90,000,000,000 in revenue!  Work with me here…

Beeeee-you-ti-fullll!  SNDA’s chart slaps a threatening depression in the face.  The world needs video games apparently, more than it needs houses.

… yes, yes, yesssss.  I’m feeling evil looking at these charts.  Volume is great, momentum is great, and this stock just keeps breaking to the upside.  You may be a little late here, but the dips look worth buying.  NTES is an online community provider in China.  So naturally, it kicks Yahoo’s butt.

But don’t let all Chinese gaming companies fool you.  Some tap into the MMORPG (that stands for “massively multiplayer online role playing game” for you old folks) by providing expansion packs, which is like a me-too kind of company.  My favorite one to look at is WebZen (WZEN), which dangerously trades on America’s stock market.  It’s almost a ten-bagger lately. Lol…

So there you have it… a quick lesson on the gaming industry and some ideas on how to trade it.  I like going for strength in the sector, and shorting breakdowns.  Keep it simple. China’s GDP should be bigger than United States so if we’re going with volume here, then the gaming industry in China has a long way to grow.  Let’s go with this for now… short American gamers, long Chinese gamers.

And yes, I do have a Wii… not gold-plated, but still a great toy to high-jack a party.

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