Buy or Sell Activision Blizzard After the UK Blocks Microsoft Deal?

Let's see what the charts and indicators look like now.

The UK blocked the Microsoft (MSFT) - Activision (ATVI) deal Wednesday, surprising analysts and shareholders alike. Britain's Competition and Markets Authority (CMA) said the deal would "stunt innovation and limit choice for gamers over the coming years".

Let's check out the damage to the charts and indicators.

In this updated daily bar chart of ATVI, below, I can see an island reversal. Prices gapped higher in late March, and prices stayed up in a relatively tight range for the past four weeks or so and then gapped sharply lower today. The price action of the last four weeks is like an island (use your imagination). ATVI gapped below the rising 50-day moving average line and is now testing the 200-day moving average line. Trading volume has surged today.

The On-Balance-Volume (OBV) was rising from early February but that advance is likely to end abruptly today. The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside earlier this month and that move is continuing. 

 

In this weekly Japanese candlestick chart of ATVI, below, I see a positive chart because today's price action is not plotted (Friday's close will be needed to plot this weekly chart.)

 

 

In this daily Point and Figure chart of ATVI, below, I can see today's sharp decline with a column of "O's". A downside price target is now shown at $67.

 

 

In this weekly Point and Figure chart of ATVI, below, an upside price target is still indicated. Today's weakness has not been plotted.

 

 

Bottom line strategy: Do we buy or sell ATVI? Microsoft's decision to appeal the CMA's verdict means we're unlikely to have an answer anytime soon.

 

(Microsoft is a holding in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells MSFT? Learn more now.)

Employees of TheStreet are prohibited from trading individual securities.