Activision Blizzard Stock Looks To Reverse Course After Beginning To Clean Up Its Act

Activation Blizzard, Inc ATVI fired 20 employees on Wednesday in relation to allegations of serious misconduct filed by the California Department of Fair Employment and Housing (DFEH) in July.

In a letter sent to employees, executive vice president Frances Townsend also stated the gaming giant would be adding 19 individuals to its ethics and compliance team, a further move toward the company attempting to turn over a new leaf.

A two-year-long investigation by the DFEH turned up evidence of widespread sexual harassment, gender-based discrimination and retaliation that in one instance led to a female employee dying by suicide.

News of the lawsuit exacerbated Activation Blizzard’s plummet. While the stock had already lost about 10% of its value since reaching a June 14 all-time high of $99.46, Activation Blizzard fell a total of 27% before hitting a bottom at $72.20 on Sept. 22.

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The Activation Blizzard Chart: The tide may be starting to turn on Activation Blizzard’s stock as it has settled into a bullish inverted head-and-shoulder pattern on the daily chart, with the left shoulder created between Sept. 1 and Sept. 17, the head between Sept. 17 and Oct. 1 and the right shoulder between Oct. 4 and Tuesday. On Wednesday, Activation Blizzard broke up bullishly from the neckline of the pattern, but didn’t receive immediate follow-through due to low volume.

If the head-and-shoulders pattern is recognized, Activation Blizzard could be in for a larger rebound over the following days and weeks. The measured move of the pattern, formulated by measuring the percentage distance between the neckline and the bottom of the head is about 11%, which could cause Activation Blizzard’s stock to soar up toward the $85 level.

Activation Blizzard stock may need to consolidate above the neckline and possibly back-test the trend as support before moving higher because it looks to be printing a doji candlestick on the daily chart, which may indicate a lower high is needed.

The stock is trading above the eight-day and 21-day exponential moving averages (EMAs), but the eight-day EMA is trending under the 21-day, which indicates bullish indecision. Activation Blizzard is trading well below the 200-day simple moving average, which indicates longer-term sentiment remains bearish.

• Bulls want to see big bullish volume come in and confirm recognition of the inverted head-and-shoulders pattern and then for the stock to rise up above a resistance level at $79.04. If Activation Blizzard can regain the area as support it has room to trade back up toward $84.
• Bears want to see big bearish volume drop Activation Blizzard back down below the neckline of the pattern to negate it. The stock has support below at $74.59 and $72.20.

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