The summer movie season kicked off last week with Fast Five, the fifth installment of the popular The Fast and the Furious film series, raking in more than $80 million in its opening weekend. Hollywood moguls breathed a collective sigh of relief at the impressive numbers because box office receipts have been down nearly every week so far in 2011 compared with 2010.

The overall limp results expose industry headwinds that are likely to grow even stronger in the years ahead. Of course, home entertainment systems now rival state-of-the-art movie houses, delivering widescreen 3-D entertainment in the full glory of digital surround sound. In addition, the theater-to-home-screen timeline has been cut significantly in recent years, so a family of four with patience doesn't need to fork over seventy or eighty bucks for fuel, tickets and overpriced snacks.

Cynical moviegoers also know that Hollywood is its own worst enemy, repackaging worn-out storylines over and over again, hoping the viewing public doesn't recoil from the endless lack of creativity. This safe path led to an unprecedented string of mediocrity in the first quarter, with review-aggregator Metacritic scoring just two widely released films,

Rango

and

Cedar Rapids

, with a "generally favorable" rating of 70 or above.

The industry hopes to make up for lost time with this summer's big blockbusters, including

Thor

,

Pirates of the Caribbean: On Stranger Tides

and

Harry Potter and The Deathly Hallows: Part Two

. While these films will certainly brighten the 2011 box office outlook, finding winning investments in this troubled sector is a tough chore, with a few A-list superstars and a big batch of B-reel has-beens.

Dreamworks (DWA) -- Daily Source: eSignal

DreamWorks Animation

(DWA)

is one of the few publically traded movie production companies. It's failed to reward investors since coming public in 2004, grinding sideways in an endless trading range (red lines), with rough boundaries between $20 and $42. The stock is currently sitting near a two-year low, which is bad news at the start of the summer movie season.

Price action in the last year shows a June low (blue line) at $26.61, followed by a recovery that failed in November at $37.74. Steady selling pressure since that time has dropped the price through 2010 support, where it's struggling to find fresh buying interest. This puts tremendous pressure on the May 26 release of

Kung Fu Panda 2

, with box office disappointment having the power to trigger a major breakdown.

With few bull markets in the movie production houses, we'll need to look elsewhere for industry exposure. We could turn to

Disney

(DIS) - Get Report

, but the entertainment giant has its mouse paws in many unrelated plays, including theme parks, television and cruise lines. Given the challenge, I recommend buying the cutting-edge technologies driving the industry, rather than their intellectual property.

Imax (IMAX) -- Monthly Source: eSignal

Imax Corp.

(IMAX) - Get Report

is an excellent choice in this regard. The stock sprung to life when 2009's

Avatar

revitalized a sluggish 3-D and high-definition industry, forcing production companies all over the world to upgrade equipment and produce multiple versions of the same material. This juggernaut has now expanded operations all over the planet, with 45 theatres open in China and plans to raise that number to 300 by 2016.

The monthly chart tells the tale here, with a 1999 peak (blue line) in the mid-$30s, followed by a steep decline and multiyear basing pattern in single digits. The stock rallied out of that long base in 2009, just one week before the

Avatar

release, and returned to the 11-year high in January of this year. It ground sideways into April and then took off like a rocket, after last week's earnings, and is now trading at an all-time high.

Reald (RLD) -- Daily Source: eSignal

RealD

(RLD)

is another way to play the 3-D technology boom. The company came public at $16 a share in July 2010 and ground sideways into November when it took off and rallied to a new high. The uptrend stalled a few weeks later near $30, giving way to a consolidation pattern that's still in play. The stock pushed back to resistance last week, after a solid rally, off the four-month low.

Unfortunately, the uptrend that started in March still hasn't posted a higher low, which is a minimum requirement for a strong breakout. As a result, I'd stay on the sidelines here and wait for a decline that drops price back into the upper $20s. A pullback to the 50-day moving average, currently near $27, might offer a great entry for patient buyers.

Cinemark (CNK) -- Daily Source: eSignal

Movie theaters have been weak investments due to dwindling audiences, but Texas-based

Cinemark Holdings

(CNK) - Get Report

could be the major exception to the rule, thanks to its broad Latin America exposure. The stock topped out near $20 (blue line) right after it came public in 2007, dropped into a long downtrend, and returned to the post-IPO high in February of this year.

It's been moving sideways since that time in a broad rising channel pattern (red lines), with support at the 50-day moving average. A rally over channel resistance, currently at $21.25, would lift the stock to an all-time high and encourage a strong buying impulse. In turn, that could yield a powerful uptrend that carries this industry superstar in the low $30s.

At the time of publication, Farley was had no positions in any of the stocks mentioned, although holdings can change at any time.

Alan Farley is a private trader and publisher of

Hard Right Edge

, a comprehensive resource for trader education, technical analysis, and short-term trading techniques. He is also the author of

The Daily Swing Trade

, a premium product from TheStreet.com that outlines his charts and analysis. Farley has also been featured in

Barron's

,

SmartMoney

,

Tech Week

,

Active Trader

,

MoneyCentral

,

Technical Investor

,

Bridge Trader

and

Online Investor

. He has written two books:

The Master Swing Trader

and

The Master Swing Trader Toolkit: The Market Survival Guide

, due out in April. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.

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