For his second "Executive Decision" segment of Tuesday's Mad Money program, Jim Cramer spoke with Ynon Kreiz, chairman and CEO of toymaker Mattel (MAT) , which reported blowout earnings two weeks ago that included a top- and bottom-line earnings beat with double-digit sales growth and expanding gross margins.
Kreiz proclaimed the turnaround at Mattel is now complete and the company is returning to growth mode. He said his company's balance sheet has been fixed, their brands have been reinvigorated and Mattel is focused on monetizing intellectual property with digital entertainment.
In our last review of MAT on Jan. 13 we wrote that, "The charts of MAT have swung from bullish to bearish and back again. Traders could go long MAT on strength above $23.50 or above $24. The $33 area is our first price target. Risk to $19 for now."
Let's see how the charts look today.
In the daily bar chart of MAT, below, we can see that the shares did not break above $23.50 until this month. MAT rallied towards $26 and has recently pulled back, correcting the rally from late January. MAT is trading above the rising 50-day and 200-day moving average lines.
The On-Balance-Volume (OBV) line has been strong and rising since early October and tells us that traders have been aggressive buyers of MAT. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line but starting to narrow as prices correct.
In the weekly Japanese candlestick chart of MAT, below, we can see that the three most recent candlestick patterns have upper shadows telling us that traders have been rejecting the highs. The 40-week moving average line has a positive slope and the weekly OBV line is rising.
The MACD oscillator has turned upward to a new outright buy signal.
In this daily Point and Figure chart of MAT, below, we can see an upside price target in the $36 area.
In this weekly Point and Figure chart of MAT, below, we see the same upside price target as the daily chart above -- $36.
Bottom-line strategy: In the short-run MAT might pullback closer to the breakout level around $23.50 but after that correction is over we would expect further gains to the $36 area.
