Don't Play Around With Mattel

 | Sep 19, 2017 | 2:56 PM EDT
  • Comment
  • Print Print
  • Print

We have not looked closely at Mattel MAT for almost a year, and back then we said, "A close below $29 on MAT will put the bears in control. Above $32 and the chart looks neutral, but it will take a close over $35 to put the bulls in command."

Looking way back on the chart of MAT (below) we can see that in December prices closed below $29 and since then MAT has declined all the way down to $15, nearly cut in half in less than a year.

In this updated daily bar chart of MAT, above, we can see prices are below the declining 50-day and 200-day moving average lines. The volume surges as prices gap lower, telling us that traders and investors are voting aggressively with their feet. The daily On-Balance-Volume (OBV) line has been working lower the past 12 months, signaling aggressive selling for months and months.

In the lower panel is the 12-day momentum study, which since mid-August shows rising momentum readings. Improving momentum can foreshadow a recovery or rally as the slowing of the price decline implies that someone is buying on a scale down.

In this weekly bar chart of MAT, above, we can see how prices have declined from around $34 in early 2016 to around $15 now. Prices are below the declining 40-week moving average line. The weekly OBV line has been declining for the past three years and the MACD oscillator is in a bearish mode well below the zero line.

In this Point and Figure chart of MAT, above, we can see the big downtrend and that our last price target has been exceeded. Exceeding a price target does not make a stock more attractive. What would make MAT more attractive on a short-term basis would be a rally back to $16.

Bottom line: The decline in MAT should be a lesson not to fight the trend and not to buy a stock because it is cheap. MAT will need a prolonged sideways period to shift from a downtrend to a neutral or basing pattern. In the meantime, we cannot rule out further declines.

Columnist Conversations

Activist investor Carl Icahn now holds an 6.86% piece of Newell Brands (NWL). The shares were trading...
Taking advantage of a non-dilutive change in Stitch Fix's (SFIX) float that is having a bearish impact on pric...
The net/net cupboards are empty these days, but this age-old investment technique which is not for the faint o...
I'm saddened to hear about the passing of former Real Money and Real Money Pro columnist Dick Arms. Dick was ...



News Breaks

Powered by
Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.