We did not like the price action in Six Flags Entertainment (SIX) when we reviewed it recently and it has continued to act poorly. Let's review the latest charts and indicators to see how much more downside risk there may be in the weeks ahead.
Looking at this updated daily bar chart of SIX, below, we can see that in the past two weeks prices have failed at the underside of the 50-day moving average line. Also, the slope of the 50-day average has turned down. While the 200-day moving average line is still pointed up it looks like it will soon flatten.
The On-Balance-Volume (OBV) line looks like it has rolled over in February, suggesting that buyers of SIX are no long being aggressive as they were in December and January. In the lower panel is the trend-following Moving Average Convergence Divergence (MACD) oscillator which peaked in November and has declined below the zero line for an outright sell signal.
In this three-year weekly chart of SIX, below, we can see an uptrend from late 2014 but the recent price action suggests that this trend may be ending. SIX is trading above the 40-week moving average line but the slope of the line is starting to flatten. Volume was heavy at the last low in August/September but the volume slowed in the subsequent advance. Technicians like to see volume increase in a rally. The weekly OBV line has rolled over at a lower level than earlier in 2016. A declining OBV line is a sign of more aggressive selling by investors. The MACD oscillator has just crossed to a liquidate longs signal on this weekly timeframe.
Bottom line: With a weakening short-term and longer-term picture I would look for SIX to decline to around the mid-$50s.
