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Two stocks are waving a bearish red flag, but traders see opportunity to buy on weakness

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A handful of stocks are waving a bearish technical red flag.

Take-Two Interactive, Biogen and Amazon are among the names that have seen or could be approaching their 50-day moving average pulling below their 200-day – that technical signal known as a death cross suggests potential pain ahead for an asset.

But, it could also present an opportunity to investors looking to buy on weakness.

"Take-Two is the preeminent studio in gaming, and yes it's getting a sell-off because of the post-pandemic sugar high. But long term, it has Grand Theft Auto 6 coming out which is going to be probably the single biggest blockbuster hit in the history of gaming," Boris Schlossberg, managing director of FX strategy at BK Asset Management, told CNBC's "Trading Nation" on Wednesday.

Rockstar Games, owned by Take-Two, has not officially confirmed GTA 6. The last, GTA 5, was released in 2013. Its other profitable franchises include Red Dead Redemption.  

"Any savvy investor is going to buy the dip at this point, because long term I think the prospects with Take-Two are very, very, very strong," said Schlossberg.

Take-Two entered a death cross in late April when its 50-day moved below its 200-day. The shares are down nearly 20% this year.

Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, is banking on Amazon despite its recent weakness.

"It is a staple in our portfolio at Lido Advisors, partially because the trend toward e-commerce was already well established before the pandemic – the pandemic just brought in the late adopters and forced them to the party – but they also have their cloud play, which was up 32% this quarter, and that you cannot ignore," Sanchez said during the same interview.

Amazon has not yet entered a death cross, though the two trend lines are closing in on one another. Its 50-day sits at less than $3,207 and its 200-day just above $3,201. The shares are less than 1% higher for the year.

"Even though we're seeing some pullbacks, which I think is natural, I think that this stock still has a lot of room to go," said Sanchez.

Disclosure: Lido holds AMZN.  

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