Choose a Better Gaming Stock

• Posted by Greg Harmon
• on April 30th, 2013

A glance at the StockTwits heat map for the technology sector should surprise noone. Apple ($AAPL) is far and a way the largest and with Blackberry ($BBRY) breaking out it is next. But focus in on the two gaming stocks in the blue circles. Seems like you could fit 10 Activision Blizzard, $ATVI, inside the Zynga, $ZNGA, box. It is ten times more popular, but should it be?

The chart of Zynga below shows a bit of a rounding bottom for the optimist. The most recent activity is a descending triangle with support at 3.04. But notice that is has relatively flat Simple Moving Averages (SMA). It also has a Relative Strength Index (RSI) that is flat at the mid line and has been so for nearly 2 months with a Moving Average Convergence Divergence indicator (MACD) that is running flat. It is in consolidation and is showing no signs that it will come out of it soon. The chart of Activision Blizzard

on the other hand, has some action to it. A gap up in February led to consolidation in an expanding wedge. It recently reconnected with the rising 50 day SMA and is running higher. In fact the 100 and 200 day SMA are also moving higher, and the price is above all of them. The RSI is moving higher in bullish territory as it touches the top of the wedge, at new highs, and the MACD signal line is turning back up and crossing to

positive after pulling back from an extreme level after the break out. This stock is setting up for another break out higher. So look at that heatmap again. Which one of those boxes do you think should be bigger?

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