Shares of Mattel, Inc. (MAT) has been working lower and lower for more than a year and are down sharply from its zenith back in 2013. Prices are due to be down sharply again Friday in reaction to its disappointing earnings release and the elimination of its dividend (sorry to mention the fundamentals). I would not recommend going long MAT because it has been crushed and is "cheap," but let's look at the charts to see if support might surface at some level below the market. (Mattel also received a downgrade Friday from TheStreet's Quant Ratings service.)
In this daily bar chart of MAT, below, we can see that prices have been cut in half the past 12 months. MAT is below the declining 50-day moving average line and the declining 200-day line. The daily On-Balance-Volume (OBV) line has been on a glide path lower the past year and tells us that sellers of MAT have been more aggressive than buyers. The 12-day momentum study in the lower panel shows a rising pattern from August to September but this bullish divergence versus the price action did not generate much of a bullish reaction.
In this weekly bar chart of MAT, below, going back 10 years we can see that prices are unfortunately back near their 2009 lows. Prices are below the declining 40-week moving average line. The weekly OBV line has been declining for nearly four years and tells us that serious liquidation has been going on for a very long time. The 12-week momentum study in the lower panel shows lower lows being made and this the selloff has not slowed.
In this Point and Figure chart of MAT, below, we can see that there is some old support way back in 2008-2009 in the $11.00 to $7.50 area. Will anyone remember that area and show up again to be a buyer? Looking at the speed of the decline versus the speed of the rally it is clear that buyers are very reluctant to buy in this falling market.
Bottom line: Falling knives are dangerous regardless of what kind of floor you have and how fast your reactions are.