Review
The following is the pattern of price appreciation and decline for Activision Blizzard (ATVI) from 1993 to 2017 with the application of Speed Resistance Lines [SRL].
1993 to 1996
In the period from 1993 to 1996, we can see that Activision Blizzard (ATVI) increase from $0.27 to as high as $1.50 or a gain of +455%. The decline that followed saw ATVI fall –58%, achieving the conservative downside target of $0.80 and the mid range downside target of $0.65. Although the chart doesn’t show it, ATVI did not rises above the 1995 level and subsequently fell as low as $0.43 by 2000 and ultimately achieving the extreme downside target of $0.50 in the process.
1999 to 2003
In the period from 1999 to 2003, ATVI rose from $0.43 to as high as $3.96, a gain of +821%. The resulting decline saw ATVI drop –63%. In the chart above we do note a possible scenario that the SRL is run on the stock at the $3.12 peak, assuming you don’t know where the ultimate peak would be. In such an instance, a conservative downside target of $1.83 and a mid range target of $1.44 were calculated.
In the big scheme of things, the conservative downside target was achieved and the mid range target was one penny short of the mark in 2002. The point of this exercise is to see, what would have been the outcome if there was an error in the timing of the calculation of the downside targets. As we shall see, these situations are all too real with outcomes that are generally surprising. However, in the immediate decline after the $3.12 price peak, the conservative downside target of $1.83 was $0.02 cents short of the $1.85 low set in September 2001.
2002 to 2009
In the period from 2002 to 2009, ATVI increased in price by +1,084%. The decline that followed brought the stock down as much as –56% before a recovery ensued. Again, we have marked off the points where an error of early use of the SRL could have been applied. In each of the three examples, the conservative downside target was achieved. Suffice to say, in the case of the SRL and price peaks, the conservative downside target is a reasonable point of reference for consideration of ATVI.
2012 to 2017
The price action of ATVI has seen the stock price increase from a 2012 low of $10.08 to the 2017 high of $66.16. The gain in the stock price has been +556%. Our SRL has the following downside targets: