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Nvidia Is Roaring, Activision Blizzard Is Screaming and Tech Is Back: Market Recon

"If you're not in the parade, you watch the parade. That's life." -- Mike Ditka

The Blizzard Tech roared in general yesterday. More specifically, NVIDIA (NVDA) roared. Know what else roared? Some of you have been pounding the table on Activision Blizzard (ATVI) all year. That stock is screaming. I have looked at it several times over the years, and have always taken a pass. My bad. ATVI was the strongest stock in the Technology SPDR ETF yesterday XLK, soaring 5.2% to close above $61 a share. As we bang out this morning note, the shares are at it again, trading closer to $62 in overnight trading. Seems to me that if you're not willing to buy ATVI near the top, you just may end up not buying ATVI. Call it a benefactor of the experiential economy. Why, though? Why the sudden surge yesterday?

I'm sure you kids saw the news about the "Overwatch League". Maybe you didn't. I am an old man, too old to really get all of the hoopla that comes with video games, and not just playing them, but watching others do so. Just because I don't get it, does not discount its reality, and does not discount the fact that there may be a significant market here. (Duh, Sarge). Prior to the opening bell yesterday at 11 Wall Street, Activision Blizzard announced the sale of the first teams for this Overwatch League. Just what is this league, you ask. Good question. This is the first major professional e-sports league with city-based teams and actual owners that have already run actual sports teams. Holy Moly. Seven teams have been awarded. The new owners include Robert Kraft of the New England Patriots, and Jeff Wilpon of the New York Mets. They will represent Boston and New York respectively. Los Angeles, Miami, San Francisco, Shanghai and Seoul are also represented.

The league is expected to begin play this year. For this first season, all regular-season matches will be played in Los Angeles. This will allow the other teams to develop sites for home and away play beginning in year two. Games are to be played weekly. Tickets and broadcast rights will be also be sold. Now, recall how much trouble advertisers have had reaching the younger generation. This is also a new avenue for sponsorship in that tough environment.

Zig or Zag

Interesting story here. ATVI has formed a double bottom just below $56 a share, and has used the 50-day simple moving average as a springboard. Back at the very top of the chart, the stock is attempting to break out for the third time in 30 days. Last night, just before the close, news broke that CFRA had reiterated a strong Sell opinion on ATVI. CFRA thinks that it will take multiple years for the e-sports concept to develop, and that the stock is over-valued. In after-hours trading, the stock sold off in "flash crash" fashion, hitting $58, and then recovering just as quickly. Take that as a word of caution when thinking about entering market orders at times when the liquidity might not be there. I have not entered a market order of any kind at any time of day in years. Somebody is always willing to eat you alive, home-gamers. Don't let them.

What do I Think?

It is going to take some effort for this name...