The charts of toymaker Mattel (MAT) have been showing weakness since the middle of November and just broke below the 50-day and 200-day moving average lines. Should we worry about some coal in our portfolio or will Santa save the charts of MAT with a year-end rally? Let's check.
In this daily bar chart of MAT, below, we can see that prices have been stuck in a sideways trading range since March. Prices have crossed above and below the 50-day moving average line several times in the past nine months or so.
Prices just broke below the creasing 200-day moving average line. The On-Balance-Volume (OBV) line shows some strength from early October, but it has not strengthened enough to foreshadow a stronger price pattern. The Moving Average Convergence Divergence (MACD) oscillator is close to breaking below the zero-line for an outright-sell signal.
In this weekly Japanese candlestick chart of MAT, below, we can see a possible broadening pattern. Prices are making wider and wider swings -- higher highs and lower lows over the past 10 months or so.
Broadening patterns can be bullish or bearish and typically have increased volume as you move through the pattern. This example shows a weak volume pattern, so I am not sure this pattern will "play out" as expected. It looks like the 40-week moving average line will be tested soon and the OBV line is still pointed up. The MACD oscillator is a different story as it hovers just above the zero-line.
In this daily Point and Figure chart of MAT, below, we can see that prices met a downside price target, but that does not make it a buy.
In this weekly Point and Figure of MAT, below, we can see a price target of $33 but a trade at $24 is needed to refresh the uptrend.
Bottom line strategy: I don't believe in Santa Claus but, the CFO and CEO may want to shoot an email to the North Pole. Meanwhile, I do not find the charts of MAT attractive.
