The shares of Activision Blizzard (ATVI) are down 1.4% to trade at $93.13 at last check, as Netflix’s slow-down in subscriber growth weighs on the video game maker, since the company and many of its sector peers have also benefitted from the stay-at-home economy. After seeing pressure at the $98 level throughout April, ATVI has recently started to slip on the charts. However, this pullback has the equity flashing a historically bullish signal.
More specifically, Activision Blizzard stock just came within one standard deviation of its 80-day moving average, after spending a significant amount of time above it during the past couple months. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, nine similar signals have occurred in the past three years. The security enjoyed a positive return one month later in 88% of those cases, averaging a 5.7% gain. From its current perch, a move of similar magnitude would put ATVI back above aforementioned pressure at the $98 level.
Thomson Reuters Eikon
Furthermore, there is plenty of pessimism that could unwind in the options pits. The security’s 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 91% of readings from the past year, indicating puts are being picked up at a much faster-than-usual rate.
Short sellers have been climbing aboard as well. Short interest is up 45.8% during the last two reporting periods, and an unwinding of these bearish bets could act as a tailwind, too, as it would take a little over two days to cover these bearish bets at ATVI’s average daily pace of trading.
