Six Flags Entertainment (SIX) is looking vulnerable on the charts. The stock is oversold and could bounce near term but a weak-looking chart and indicators suggest you should "watch your 6" if trading SIX from the long side.
In this 12-month daily bar chart of SIX, above, we can see prices have taken a roller-coaster ride from $46 to $62 and nearly all the way back again. Prices have been under pressure and in a downtrend from late July. Prices have broken below the 50-day simple moving average line and its slope has turned negative. SIX has also broken below the 200-day average, whose slope is still neutral or flat. We can also see we are close to a bearish death cross of the 50-day and 200-day averages. The On-Balance-Volume (OBV) line has declined throughout August, telling us that sellers of SIX have dominated with heavier volume on days when SIX has closed lower on the day. Price momentum has slowed but we have yet to see a bullish divergence to suggest a decent rebound.
This three-year weekly chart of SIX, above, supports the bear case. Prices are below the 40-week moving average line and the slope of the line is turning down. Prices are testing key chart support in the $48-$46 area. The OBV line is going straight down on this time frame, signaling aggressive selling. The trend-following Moving Average Convergence Divergence oscillator is crossing below the zero line for an outright sell signal.
Bottom line: The technical case is clear for anticipating further weakness in SIX, but in the short run an oversold bounce could develop. I would be a seller of a weak bounce on light volume looking further renewed selling and a deeper decline to the low $40s.