|Why has the company that made Shrek, Shrek II, Shark Tale, and now Madagascar, its newest feature-length cartoon, been receiving poor reports from the likes of Lehman Brothers and other brokerage houses? During the US Memorial Day weekend, Madagascar brought in $61 million in US box offices. How much more will it make with peripheral sales? Without analyzing the fundamentals of the company, or taking into account films in the pipeline like Shrek III, what are the technicals telling us?|
|Figure 1: DreamWorks daily. To dream or not to dream ... that is the question.|
|Graphic provided by: AdvancedGET.|
|Figure 1 is a daily chart that shows how DreamWorks came onto the market in October 2004, opening at $39.50 and closing at $38.75. We would have expected it to rise after the first day's trading, and it did, rising to $41.19 by November 12, but then it fell to $36.70 by November 30. Within three days, it was back up to $42.60, but gradually sank to a low of $33.38 by January 2005. From this level, the share price gradually rose to a high of $41.28 by April 7, 2005.|
|After reaching a new high on April 7, the company was downgraded by various brokerages for various reasons. Those comments hurt the stock price, which dropped on a gap to a low of $30.97 by May 17. There was a slight recovery, and then a further drop to $29.10 on May 31 when yet another analyst at Lehman gave it a poor report, perhaps based on the box office of Madagascar on Memorial Day. Possibly the analyst had seen the movie and judged it not up to expectations--in other words, not another Shrek. What now for the share price?|
|Technically, the price should by all accounts trend lower, as it has broken below a major support trendline. However, the chart does show the following positives:|
|To conclude, we could start accumulating DreamWorks at present levels based on the two indicators, and add to our purchases as it moves above $30.98 and $34.65.|
Go, Shrek! Go!
|Address:||3256 West 24th Ave|
|Phone # for sales:||6042634214|
Click here for more information about our publications!