Take-Two is yet another victim of video game malaise

However, analyst Michael Pachter of Wedbush Morgan Securities is of the opinion that Take-Two is not necessarily reflective of the downturn in video games. He says that the company's woes are centered on pipeline issues and costs (in fact, this piece at USA Today discusses the effect of Take-Two's baseball games on the situation).

He's correct about Take-Two having these challenges, but I would argue that today's sell-off is still related in part to the bearish sentiment currently surrounding video game stocks. Even if you didn't think so, you probably should assume that it is, and make sure you are properly discounting further weakness in the space.

To technical traders, the observed price/volume action looks like a great setup for a bounce. In particular, the volume is truly remarkable.

But, we have to remember that momentum may not necessarily return to the stock, or the sector, as quickly as we would like. Many of the video game companies now have to be looked at as value plays. If you check out the charts on Activision Blizzard (ATVI) and Electronic Arts (ERTS), they now imply a quantity of obligatory patience to go along with any thesis.

Yes, it looks like the easy money has already been made in the latest console cycle. So, don't buy Take-Two or any other video game equity expecting quick gains. You could get lucky, certainly, but luck is not the best reason to buy in this market (or any, for that matter).

Disclosure: I own Activision Blizzard and GameStop; positions can change without notice.