Signal Says Now is the Time to Target 'Barbie' Stock

MAT's 40-day moving average has proved bullish for the stock in the past

Deputy Editor
Aug 7, 2023 at 12:56 PM
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Mattel Inc (NASDAQ:MAT) stock is up 3.5% to trade at $21.16 this afternoon, likely getting a boost from the megahit Barbie movie crossing $1 billion at the box office. Mattel stock hit a new 2023 peak of $22.62 on July 27, but prior to today had spent the last two trading weeks off by 0.5%. The good news for MAT is the recent lackluster price action has the stock trading near a historically bullish trendline. 

Mattel's recent consolidation -- seen in the chart below -- put the equity within one standard deviation of its 40-day moving average. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, comparable moves have occurred five times over the last three years, with MAT averaging a 3.8% pop one month after the pullback, with returns positive 80% of the time. A similar move from its current perch would put the equity just shy of its 2023 high.

MAT Chart August 72023

Put traders have been growing bolder and could be caught off guard. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MAT's 10-day put/call volume ratio stands higher than 73% of readings from the past year. This means long puts have been getting picked up at much faster-than-usual clip.

MAT also sports attractively priced premiums, per the equity's Schaeffer's Volatility Index (SVI) of 31% that ranks in the low 8th percentile of its 12-month range. This implies options traders are pricing in relatively low volatility expectations right now.
 

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