Activision Blizzard Stock Boasts Reliable Bull Signal

The stock is seeing relatively well-priced premiums, as well

Deputy Editor
Sep 16, 2020 at 2:41 PM
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The shares of Activision Blizzard Inc (NASDAQ:ATVI) are down 0.7% at $81.20 at last check, struggling to recover from its early September drop -- though still on track for its first weekly win in the last four. However, if past is precedent, ATVI has pulled back to a historically bullish trendline that could help push the stock higher and out of its rut. 

Specifically, Activision Blizzard stock just came within one standard deviation of its 80-day moving average, after trading above it for a long period of time. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, seven similar signals have occurred during the past three years. ATVI enjoyed positive returns one month after each signal, averaging a 6.6% gain. A similar move from its current perch would put the equity above the $86 region, nearing its August 6 all-time high of $87.72. 

ATVI Sep 16

Coming into today brokerages are looking optimistic. Currently, 19 analysts carry a "buy" or better rating on the security, while three sport a "hold," and one a "strong sell." Meanwhile, the 12-month consensus price target of $95.03 is a 17.4% premium to current levels. 

Calls have been favored in the options pits in the last 10 weeks. ATVI sports a 50-day call/put volume ratio of 4.71 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 70% of annual readings, suggesting a stronger preference for calls than what's typically seen this year. 

Lastly, speculating on ATVI's next move with options could be a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 35% stands higher than 24% of readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

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