How To Trade Activision Blizzard Before And After Q3 Earnings, EU Decision On Microsoft Acquisition

Zinger Key Points
  • Analysts, on average, estimate Activision Blizzard will report earnings of 50 cents per share on revenues of $1.69 billion.
  • Activision Blizzard negated its most recent uptrend but hasn't yet confirmed a downtrend.

Activision Blizzard, Inc ATVI was trading slightly lower as the stock headed into its third-quarter earnings print, expected after the market close Monday.

When Activision Blizzard printed a second-quarter revenue beat Aug. 1, the stock slid about 1% lower the following day before rallying almost 2% over the two trading days that followed. The stock then entered into a downtrend, declining over 12% between Aug. 5 and Monday.

For the second quarter, Activision Blizzard reported adjusted earnings of 48 cents per share, which was in line with analyst estimates. The company reported revenues of $1.644 billion, which beat the $1.58-billion estimate.

For the third quarter, analysts, on average, estimate Activision Blizzard will report earnings of 50 cents per share on revenues of $1.69 billion.

On Tuesday, traders and investors will be awaiting a preliminary decision from EU antitrust regulators on whether to allow Microsoft's proposed $69-billion acquisition of the gaming company. Regardless of whether Activision Blizzard rises or falls after earnings, that decision could ruin a move higher for the bulls or a move lower for the bears.

From a technical analysis perspective, Activision’s stock looks neutral heading into the event, having negated an uptrend but holding above the upper trendline of a falling channel.

It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

See Also: Activision, Take-Two And 3 Stocks To Watch Heading Into Monday

The Activision Blizzard Chart: Activision Blizzard fell back into a falling channel pattern — which began on Aug. 19 — at one point Monday, but bulls came in and bought the dip, causing the stock to pop up above the pattern.

If Activision Blizzard closes the trading day above $71.30, the stock will print a bullish hammer candlestick, which could indicate higher prices will come on Tuesday.

  • If that happens, Activision Blizzard may find resistance at the eight-day or 21-day exponential moving averages (EMAs). If the stock is unable to break up through the EMAs, bearish traders can watch for a bearish candlestick, such as a doji or shooting star candlestick, to print just under the areas.
  • Bullish traders want to see Activision Blizzard surge up above the $74 mark, which would suggest the recent bearish price action was a bear trap. If the stock can trade up above that level on Tuesday, Activision Blizzard may resume its uptrend.
  • Activision Blizzard has resistance above at $72.20 and $74,59 and support below at $67.77 and $64.53.

Photo via Shutterstock.

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