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Is Mattel Swell Enough To Be A Buy?

10/17/12 10:57:05 AM
by Koos van der Merwe

Using a program to look for future buys is always a must and should be looked at carefully.

Security:   MAT
Position:   Accumulate

Children like toys, no matter how depressed the market is, and parents will go out of their way to have those gifts under the Christmas tree or at the birthday party. So when Mattel Inc. (MAT) gives a buy signal on an explorer program, it is not something that should be ignored.

FIGURE 1: MAT, WEEKLY. Here's a chart of Mattel showing the trend since 2009.
Graphic provided by: OmniTrader.
Figure 1 is a weekly chart of Mattel Inc. and shows how the price moved from a low of $10.36 on March 2, 2009, to its current high of $36.01. The chart shows how the share price has risen within a support & resistance line, buy signals were given by the vote line, based on the six strategies shown in green below the vote line.

Sell signals were given when the share price broke below the trailing stop. At the moment, the four-period relative strength index (RSI) and the 10-period RSI are both suggesting a sell. The price is moving sideways and has not yet broken below the trailing stop, confirming a sell signal. The vote line has given a stop, though. What does the daily chart say?

FIGURE 2: MAT, DAILY. Here's a chart showing a vote line buy signal.
Graphic provided by: OmniTrader.
Figure 2, the daily chart, was the one that alerted me to look at MAT, because the vote line brought the share to my attention by giving a buy signal. In the chart, the buy signal in the vote line was triggered by all the strategies except the RSI 12-period strategy. The indicators on the chart does show that a buy signal is given by the RSI four-period indicator, but not by the RSI 10-period indicator.

With the share price moving sideways, I would rather wait for a move above the upper pivot point of $36.24 before buying. The share does look very attractive and should be watched. That the price is holding its position above the trailing stop is also a strong positive.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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