In another of his "Executive Decision" segments during Wednesday's Mad Money program, Jim Cramer sat down with Jim Reid-Anderson, chairman, president and CEO of Six Flags Entertainment Corp. (SIX) . Jim was looking to get some insight on why the stock fell 16% after the company reported third-quarter earnings.
Reid-Anderson said that weather was a big reason for the company's disappointing results, in which earnings, revenue and attendance missed expectations. Of course it didn't help that Six Flags reported results at a time when the market was getting pummeled. Cash flow is good, international growth remains a strong driver and there are multiple opportunities in the U.S. to improve operations.
Forget the fundamentals and the white knuckle rides and let's check out the charts and indicators.
In the daily bar chart of SIX, below, we can see that prices largely traded sideways until October and then the bear took control. Prices gapped to the downside and support did not develop until the $52 area. The slopes of both the 50-day and the 200-day moving averages are negative and we can see a bearish dead cross of these two indicators at the beginning of November.
The daily On-Balance-Volume (OBV) line turned lower in early September and tells us that sellers of SIX have become more aggressive the past two to three months. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside this month for a cover shorts buy signal.
In this weekly bar chart of SIX, below, the big downside price gap disappears. Prices are below the declining 40-week moving average line. The weekly OBV line shows a longer decline than the daily OBV line and signals more liquidation and selling since December. The weekly MACD oscillator is in a sell mode below the zero line.
In this Point and Figure chart of SIX, below, we can see an upside price target but we can also see a lot of overhead resistance by looking at the Volume at Price data (left scale). A decline to $51.53 would be bearish and open the way to further declines, in my opinion.
Bottom-line strategy: SIX is likely to retest the October low around $52. Prices may or may not hold. I am not a fan of roller-coaster rides and for now I am not a fan of SIX.