Stock Trading Predictions & Technical Analysis: ATVI

Friday, November 13, 2009

ATVI - In Safe Buy Zone

ATVI - SAFE BUY ZONE

ATVI has a very interesting chart, and actually reminds me of ABX's chart when I had taken my long position. ATVI is currently standing just below $11.75 where it has resistance. ATVI has relatively strong support at around $11.30 above its 200 day MA, despite having crossed below it a couple weeks before crossing back over it again. However, just like when I took my positon with ABX, ATVI is currently is a Safe Buy Zone. This means that ATVI would only need to make a small move downward to give us a SELL SIGNAL, while at the same time only needs a small move up to give us another BUY SIGNAL. ATVI closed today at $11.69, a sharp move above $11.75 above its 50 day MA towards $12.00 would be enough for a BUY SIGNAL and potentially seeing ATVI move higher. A move below $11.25 around $11.15 would be enough for a clear SEL SIGNAL. Basically if you took a position at the current price of $11.69 and set a Stop Loss order at $11.15, you would only be risking -4.6%, with the potential of seeing ATVI providing you a return as high as +11% towards $13.00. Although a potential gain of +11% may not be huge it is relatively good considering a -4.6% risk, and once you start making gains this doesn't mean it can't go higher then. Also, the MACD which I have usually found to give less failed signal than the stochastic had given us a BUY SIGNAL following the move back up the 200 day MA. The stochastic also looks bullish looking to move higher towards the over 80 level, which hints that ATVI has more way to go. When the Dow Jones is starting to trend down, as it is now, it is very hard to find stocks for which look like they could move higher despite the market possibly going down. ATVI may be one of the minority of stocks that could move higher, despite a pull back from the Dow Jones. Some stocks act more independently than other towards the general market direction. What further fuels this possibility is the fact that ATVI closed slightly upwards yesterday, despite seeing the Dow Jones move relatively lower. ATVI has a low Beta of 0.66 and even if ATVI were to follow the market downwards the Beta may indicate it may not move as low as the general market. ATVI has led me to come up with a new signal indicator, named the "Safe Buy Zone", which simply means that going long at the current level would only require to risk less than -6% of your investment (so set a Stop Loss order of less than -6%), with obviously a higher potential return. You may get BUY SIGNALS from stocks but from which you would need to set a relatively high stop loss order.

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TECHNICAL INDICATORS

BUY SIGNAL: Indicates the possibility of the start of a new up trend or the continuation of the current up trend. This signal may be often given in the early stages of a potential new up trend that was preceded by a down or sideways trend. Such signals do not always succeed and may fail at time.

BUY: Indicates that the current up trend is already in motion and a BUY SIGNAL was already given earlier. A BUY does not necessarily indicate that the stock will continue higher from here, but simply that the stock is trending up. The further into the trend you decide to take a long position, the more risk you have of seeing it reverse back down sooner rather than later.

STRONG BUY SIGNAL: Indicates a stronger, more significant and reliable signal than a BUY SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG BUY: Indicates that the current up trend is already in motion and that STRONG BUY SIGNAL was already given.

SELL SIGNAL: Indicates the possibility of the start of a new down trend or the continuation of the current down trend. This signal may be often given in the early stages of a potential new down trend that was preceded by an up or sideways trend. Such signals do not always succeed and may fail at time.

SELL: Indicates that the current down trend is already in motion and a SELL SIGNAL was already given earlier. A SELL does not necessarily indicate that the stock will continue lower from here, but simply that the stock is trending down. The further into the trend you decide to sell a position, the more risk you have of seeing it reverse back up.

STRONG SELL SIGNAL: Indicates a stronger, more significant and reliable signal than a SELL SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG SELL: Indicates that the current down trend is already in motion and that STRONG SELL SIGNAL was already given.

HOLD: Indicates that traders who already hold this stock, should hold on as long as the trend persists. This signal is usually given during an up trend for which it would be considered too risky to take a long position at this point.

STRONG HOLD: Indicates that the current trend has been in motion for a while and rarely deviated away from the trend. Although the stock may continue higher, there may not be enough potential up side to trigger a BUY SIGNAL. This type of indicator usually means that the stock has very strong support levels which may have been tested but not broken.

WAIT: Usually given during a sideways trend for which we are waiting for a move that would trigger a BUY SIGNAL or SELL SIGNAL. This could also indicate uncertainty and the risk that would be taken if you were to take a long position at the current level. Taking a long position after giving a WAIT indicator is considered a gamble.