Game Over For Toy Stocks?

Toy makers Hasbro, Inc. (HAS) and Mattel, Inc (MAT) saw stellar gains in the year to date rally, the going however has gotten significantly choppier since the May 22nd highs in the S&P 500 and again yesterday, July 17th when Mattel, Inc (MAT) reported its latest earnings.  Second-quarter net income for the company slipped 24 percent to $73.3 million from $96.2 million, or to 21 cents a share from 28 cents in the same quarter one year ago.  The stock got whacked to the tune of 6.84% on the back of this news.

On the weekly chart the  multi-year stealth rally of Mattel, Inc (MAT) is notable.  More importantly, see how the stock accelerated out of its longer-standing trading channel earlier this year.  In markets there is a thing called ‘mean reversion’ and as it applies to Mattel, Inc (MAT) likely means the stock over time needs to work back down into this channel anywhere between $36 and $41.

mat weekly

The look of Hasbro, Inc. (HAS) from a multi-year perspective is equally concerning, at least in the medium-term.   The stock’s late 2012 top was marginally re-tested at the May highs this year, which however quickly led to a fairly sharp move lower.  With yesterday’s earnings news out of Mattel, Inc (MAT) the stock also dropped in kind, to the tune of 2.40% and by so doing put in place a lower high versus its May highs.  Hasbro, Inc. (HAS), so you know, is scheduled to report its earnings on July 22nd.

has weekly

On the closer up daily chart of Mattel, Inc (MAT) note that with yesterday’s post earnings drop the stock confirmed a meaningful double top and also took out important horizontal support around the $44.00 mark.  From here the next support sits around the 200 day simple moving average, which currently is near $40.70 and also coincides with the upper end of the longer-standing trending channel discussed above.

mat daily

In summary, while Hasbro, Inc. (HAS) still has to report its earnings next week, the signs from both the near and longer-term charts of both of these toy makers point toward continued pressure on the shares, at least for the time being.


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