All good things eventually come to an end and it looks like Six Flags (SIX) is about to decline as much as 50% in the coming two years. The good news is that there may still be time to protect your holdings in this name before the final thrust toward $65.
As you can see from this monthly bar chart, the April high hasn't been followed by an orthodox, impulsive declining pattern, which Elliott Wave Theory requires to declare the entire structure from the 2010 low as complete.
Until that is visible, another push toward $65 can't be ruled out.
But time is running out, as can be seen by the major bearish divergence sell signal that is now in place. This signal occurs when the most recent price behavior creates higher highs while, during the same period, stochastics make lower highs. The bold blue line connecting the price peaks of December and April is pointing higher vs. the same line in the stochastics pane pointing lower. Historically, this is a harbinger of rough times ahead.
While a final rise is allowed above April's extreme near $62, it's not required. With the blue arrow's path anticipating a decline into the green zones, the risk of 30 points of decline vs. 7 points of reward strongly suggests that this is not a time to be buying. Rather, our decision support engine (DSE) suggests using sell stops to protect current long exposure and/or establishing shorts in this red box that price is now inhabiting.
Notice the top of the rise is labeled with two blue 5s and two purple 1s in a circle. That's due to the potential for another high. Once $50 is closed below, the top will be in place and the prolonged decline toward $30, plus or minus $3, should be in force.
Finally, at April's price spike/reversal, the olive-gold price band was exceeded for a few days. This is the upper 2-standard-deviation band, which controls 95% of normality and illustrates extreme conviction among traders and investors that prices can only move higher, a stance that guarantees an imminent price reversal. Highlighting the exuberance further, on April 27 prices came within ticks of the upper 3-standard-deviation band (not shown), which controls a whopping 99.7% of normality.
The bottom line is that when the herd is clamoring for anything, it's best to sell it to them. Here, too, the buying mania that has developed since 2014 has gone nearly vertical. The DSE informs us here to use the summer's theme park focus to exit shares of SIX and avoid the pains of the winter, which in the market's case often lasts more than a few months. If long, use $55 as your sell stop level and if flat, consider establishing short exposure on that break, too.