Caution....
I've been trying to learn more TA (technical analysis not Total Annihilation...heaven forbid!).
There is a prevalent chart pattern called the 5 wave decline and
reversal that ATVI might be in right now. If you believe in this
sort of thing, we are in the second wave, a bad time to buy....when
selling dries up and buyers with bad timing (that would be me) buy at
a false bottom. Then the bottom really falls out and the stock drops
to its final resting point where it will briefly rally and retest the
low (forming a double bottom). After which, the stock move higher
for good.
top
x /1st peak
x x
x x x
x x x
x x We are here. Potential for a small rally.
x / x
xxxx x
x x
x x
x x x
xxxxx xx
x \ /
Double bottom
If something very positive comes out of the company, this might be
aborted, but this apparently is how these corrections are supposed to
take course. If you look at other charts, you can see similar
patterns. Check out TXN, ADI, BROD (correction before last). But
this doesn't always happen! Sometimes there is only 4 waves,
sometimes a single bottom, etc. But I wanted to let everyone know
what I learned. Based on the short term indicators, it would seem
that we have a decent chance at a short-term rally...maybe to $15 and
then down we go again...maybe. I think it depends on the underlying
strenght of the stock. That's the problem with TA...more of an art
than a science.
Please don't use this as the sole reason to buy or sell the stock! I
am still what I consider a novice at this sort of thing. What do I
know?! Some things that I have learned are 1) The trend is your
friend. Wait until the trend breaks solidly before investing. Don't
fight it, you will lose everytime. 2) Don't rely on single
indicators to determine when to buy or sell. 3) Don't ignore
broader social/economic issues which can affect the market. 4) Don't
bet the house on anything you do based solely on TA.
I hope I'm wrong! As a long-term investor, I am investing in ATVI
based on the long-term potential of the company. So a couple of
points to the downside won't affect me that much (The price you pay
for trying to call a bottom). But this TA helps in finding entry and
exit points.
Anyway, good luck!
Tom C. |
