Imax Made a Weak Recovery and Could Have Another Decline Ahead

 | Dec 14, 2017 | 2:00 PM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

imax

Imax Corp. (IMAX) was nearly cut in half earlier this year but it made a recovery rally from late August. Momentum has weakened on the rally and the On-Balance-Volume (OBV) line does not suggest aggressive buying so I would not be surprised to see IMAX trade lower in the weeks ahead. Grab a soda and some popcorn and let's review the charts and indicators together.

In this daily bar chart of IMAX, below, we can see a bullish divergence from late May to August as the 12-day momentum study made higher lows when prices made lower lows. This bullish divergence foreshadowed some price strength.

An uptrend got under way in September and IMAX rallied above the rising 50-day moving average line. In the past three weeks IMAX has tested the declining 200-day moving average line. Rallies above the line have not been long sustained. The daily OBV line has not shown a positive bias since late September and this makes me question the strength of the advance from the August low.

In the lower panel the 12-day momentum study shows a pattern of lower highs from September to the end of November despite the higher price highs. This is a bearish divergence and suggests that the rally has "run out of steam."

In this weekly bar chart of IMAX, below, we can see a bearish alignment of indicators. Prices have lost ground over the past three years. IMAX is testing the declining 40-week moving average line. The weekly OBV line has declined from April of this year and its sideways movement over the past four months is not bullish.

The weekly Moving Average Convergence Divergence (MACD) signaled a cover shorts buy signal in September but it is still below the zero line and the two moving averages that comprise this indicator have begun to narrow towards a possible sell signal.

In this Point and Figure chart of IMAX, below, we can see more price activity in the lower part of the recent consolidation pattern. Normally this is bullish and in fact there is a possible $30.08 price target shown. However, the pattern also shows a number of rally failures and a decline to $23.25 would probably weaken the picture.

Bottom line: With less than robust indicators I would shy away from the long side of IMAX. Prices look like they can weaken from here and a close below $23 could precipitate a decline back to the $20-$18 area. A close above $27 on increased volume would strengthen the chart.

Columnist Conversations

View Chart »  View in New Window » BA chart I'm STALKING this one for a buy trigger........
View Chart »  View in New Window »   WEEKLY
BABA is still dancing on key weekly support here.  Wait for a trigger! View Chart »  Vi...
BABA is still dancing on key weekly support here.  Wait for a trigger! View Chart »  Vi...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

COLUMNIST TWEETS

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.