EA Earnings Preview: Market Awaits Video Game Bellwether
The fundamentals of the company look okay, as it is set to release some mega-titles in the coming quarter -- but the recession could still take a major chunk out of sales. If we were to try to describe ERTS's technical prospects, "ugly" comes to mind. The shares face technical resistance on a number of fronts: daily, weekly, and monthly. The most daunting is from the 10-month trendline, which has pushed the stock lower since June 2009.
In addition to this resistance, ERTS is waging war with its 10- and 20-week moving averages. These trendlines have played the fulcrum to a seesaw the shares have been riding on since June 2009. On a short-term basis, the stock has butted up against resistance from its 50-day moving average. It has topped this trendline twice since November, and quick plunges followed.
One thing is certain heading into ERTS's report, it is going to take some positive earnings news and substantial buying in order to push the stock through these trendlines. Of course, with lowered expectations from investors, it may not be as difficult for ERTS to post an upside surprise. Remember, earnings reports can lead to a quick move in either direction for a stock.
Editor's Note:This story has been updated to remove a reference that incorrectly said Electronic Arts publishes Call of Duty: Modern Warfare 2.