As the gift-buying season rolls on, two titans among toys seem to be heading in different directions.
By looking at the charts over the last month, you might think Mattel (MAT) has the inside track on Star Wars merchandise rather than Hasbro (HAS). But it's the other way around. Hasbro has been much stronger for the year, up more than 27% compared with a 10% drop in Mattel, but this past month saw Mattel pick up 11% vs. a 13% loss in Hasbro. Looking at the technical setup, I don't expect this reversal of fortunes to stop quite yet.
Over the past month, Mattel has marched higher in a bullish channel just clearing the longer term resistance level of $25 over the past week. The Relative Strength Index (RSI) is approaching 70 and it looks key for this run to continue to have it clear 70 and stay there. We are seeing a solid move in the trend as both the shorter-term Commodity Channel Index (CCI) and longer term MACD are bullish here as well as the volume action represented by the Force Index.
Price is pushing the Bollinger Bands to the upside here, so Mattel is ticking basically every bullish short-term box. I would keep a stop just below $25 and play the continued rise in this channel looking to buy pullbacks to support or a close over the resistance of the channel. I'm looking for this one to reach $28 with a possible short-term carry through to $30.
The weakness of the Hasbro daily chart appears to exceed the strength in the Mattel chart. Again we see a similar channel, but this one bearish and the stock has lost the longer-term support price of $70, which should now as act as a stop level for shorts. Unlike Mattel, the secondary indicators for trend, momentum and volume have pushed into extreme oversold territory. I might consider a rebound play should price break above the resistance of the bearish channel and we see the CCI and RSI cross out of the extreme oversold territory. But this would only be a short-term long play and while I do think it presents a nice opportunity, I will absolutely wait for a trigger. Until that time, this is one to avoid for me. Given the big move lower recently, I'm not looking to short right here until we get some kind of trigger on the longer-term chart as the opening of Stars Wars this week may trigger a bit of buy, especially if the movie shows better-than-expected box office results in the first weekend and even opening night.
The weekly chart trigger on Hasbro appears to be the $68 level. A close under $68 and the stock would see the perfect setup for a fill the gap lower trade. We have the 8-week simple moving average (SMA) trading under the 21-week SMA now and secondary indicators have turned bearish after a solid run for the stock in 2015. Momentum has witnessed the RSI dropping under 50 and the Vortex Indicator has the trend now signaling a bearish move. Volume, both on the shorter-term Chaikan Oscillator and longer Chaikan Money Flow (CMF) have both just move bearish in the last two week. Again, the Star Wars release may prop this a little. But if we see a trigger in price, a move to $64 could be at hand here with $57.50 becoming the ultimate target during 2016.
The holiday season will be about more than Star Wars, but when it comes down to the war among the toy sellers, Hasbro and Mattel are the only two players and, right now, the force is will Mattel.