Netflix (NASDAQ: NFLX), a DVD-rental business that competes with Blockbuster (NYSE: BBI), was upgraded yesterday by Michael Pachter, an analyst with Wedbush Morgan Securities. He sees good tidings ahead for the company. He believes that Netflix will see higher margins and a healthy stream of earnings. His thesis centers on the fact that the subscriber base is likely to grow and that streaming movies will lower the cost of delivery.

Upgrades are tricky beasts. Ideally, an investor or, more likely, a trader, wants to be in the stock before the upgrade occurs. Buying a company after it's been upgraded requires a lot of due diligence. And you have to get over the fact that you might be buying at a high price.

At least one of my stocks is doing pretty well in this terrible, depressing market environment. Activision (NASDAQ: ATVI) hit a new 52-week high of $36.84 on Tuesday. It closed a little below that, but it was a great, high-volume day for the stock, one that saw the shares rise almost 5%.

Yes, with the Dow Jones index shedding 100 points, with every other stock in my portfolio in the red, including MFA (NYSE: MFA), which closed down to $6.66 -- the number of the beast, my friends -- Activision not only held its own, but it powered higher. Perhaps it's due to the new Guitar Hero game coming out for the DS. Perhaps there's a new wave of excitement over the merger now that investors are receiving their documents (I just got mine the other day, a big book full of wonderful information about the Activision/Vivendi agreement). No matter, though, it was Activision's day, since competitors Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO) were down Tuesday, and THQ (NASDAQ: THQI) closed up only four measly pennies.

I love this price action, and I think it might be predicting a prosperous Q4 holiday season for the company, which will eventually be called Activision Blizzard after the merger. I'm also hoping the action indicates that the stock will be reasonably stable during the summer, which I think is going to be rough on the markets as oil and inflation headlines dominate the tape.

The video-game sales report for the month of March is in. The NPD Group, a market-research company, said that sales of hardware and software jumped 57% compared with March of last year, coming in at $1.7 billion. Hardware revenue grew 46%, while software sales leaped by 63%. One of the best analysts of the video-game sector, Michael Pachter of Wedbush Morgan, thought that software sales might increase 47% from last year.

That's okay, though -- video games certainly have the right, as well as the ability, to surprise to the upside, especially when Nintendo (OTC: NTDOY) released the incomparable Super Smash Bros. Brawl for the Wii in March. I don't think there's one soul on the planet that didn't expect that title to be tops in March -- it sold 2.7 million units. Seriously, many gamers are addicted to this. I know one individual who still plays several rounds of smash-brawling antics twice a day! The title definitely drove Wii sales -- the console sold 67% more units in March than it did in the previous month.

The data continue to show that video gaming is hot, and that quality publishers such as Electronic Arts (NASDAQ: ERTS) and Activision (NASDAQ: ATVI) should be investigated as potential ideas on pullbacks. However, I think Nintendo is the bigger one to look at now since the Wii continues to do well and since it has an interesting putative catalyst coming up in May with the Wii Fit exercise system. Of course, you may just want to look right now. 'll like Nintendo's stock a whole lot better if it gets below $60 per share. No matter what, though, the company is still giving Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) a nice run for their collective money. With the DS, the Wii, Mario, etc. -- Nintendo certainly commands respect, I'll say.

Disclosure: I own shares of Activision; positions can change at any time.