The charts of toy manufacturers Hasbro (HAS) and Mattel (MAT) look like mirror images after the companies reported earnings earlier this year, with the former beating on the top and bottom line and the latter missing on both those metrics.
Hasbro had an incredible run since obtaining the rights to Walt Disney's (DIS) Princess and "Frozen" lines from rival Mattel in January 2016, but the gap move higher this year may have lost its momentum and the stock looks prepared for a pullback.
Hasbro dropped in sympathy with Mattel's reporting on January 25th but then jumped over 14% when the company reported its own earnings on February 6th, continuing higher and ultimately booking a 20% gain. The price action over the last several weeks, however, has formed a rudimentary head and shoulders or rounded top on the daily chart, above support at the $96.60 level.
The slow down in momentum is reflected in the relative strength index moving out of an overbought condition and below its 21 period average, and moving average convergence/divergence making a bearish crossover. The accumulation/distribution line is rolling over, suggesting some loss in buyer interest.
The graph at the bottom of the chart, which reflects the percentage difference between daily price and its 200 day moving average, implies a future reversion to the mean. A series of small high wick or upper shadow candles have appeared recently and they are formed when the stock is unable to hold its daily upper range.
Hasbro is a short candidate after a break below support using a tight and disciplined trailing buy-to-cover stop.