This bull signal has rarely been wrong in the past
The shares of Activision Blizzard Inc (NASDAQ:ATVI) gapped higher earlier this year, after it was announced that Microsoft (MSFT) would acquire the company for $68.7 billion. Though still up 17.6% year-to-date, the stock has been waning on the charts since then. However, its recent dip has ATVI near a historically bullish trendline that could push it back toward its January peak.
Specifically, Activision Blizzard stock just came within one standard deviation of its 100-day moving average, after spending considerable time above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, similar signals have occurred five times during the past three years, with ATVI averaging an 8% gain in 80% of the occurrences. A similar move from its current perch would put the equity above the $84 level.
The brokerage bunch is leaning pessimistic toward the gaming name, so a shift in sentiment could provide tailwinds. Currently, 12 of the 21 analysts in coverage carry a "hold" rating, with one "strong sell" also on the books.
Plus, now looks like an affordable time to speculate on the stock's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 16% stands higher than 25% of readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. What's more, ATVI tends to outperform these volatility expectations, per its Schaeffer's Volatility Scorecard (SVS) tally of 95 out of 100.