Show business bullishness

While a stock may rise or fall over the long term based on its fundamental merits, in the short term prices can be pushed higher or lower by all manner of catalysts, including misinformation (speculation that turn out to be untrue), misinterpretation of information, and good, old-fashioned greed and fear. “Overshoots” are a fact of life in the markets, although it’s always difficult to separate potential overreactions from sustainable moves in real time.

Just a little over three years ago, for example, Mattel (MAT) rallied 21.7% over the course of 13 trading days in late June and early July 2023 as the marketing blitz for the “Barbie” movie kicked into overdrive:

That move may have seemed logical at the time, since the manufacturer of the iconic dolls would presumably be a prime beneficiary of the film’s success. But as the chart shows, by the time “Barbie” was released across the country on July 21, MAT’s rally had essentially run its course. Shares moved sideways for a couple of months before selling off that October. Over the past three years, the stock has only twice returned to “pre-Barbie” territory (most recently in February of this year)

Jumping forward to the past few weeks, some traders may have wondered whether a similar dynamic was playing out in IMAX (IMAX), the high-resolution cinema format that has gotten a major boost from the release of “The Odyssey,” which is the first feature film shot entirely with IMAX cameras:

The stock jumped on July 23 after the company’s earnings announcement, which specifically cited the strong early performance of “The Odyssey,” which had hit theaters a week earlier. The question, for traders and investors, is whether the recent stock rally reflects a genuine inflection point for the technology (and potentially greater, sustained success for the company), or is more of a “peak IMAX” sentiment moment. After all, movies like “Barbie” or “The Odyssey” come around only so often, and as the former example proves, even dazzling success at the box office doesn’t always translate to stock gains.

That said, there are arguably some important differences between the “Barbie” and “Odyssey” scenarios—namely, MAT rallied energetically before the release of “Barbie,” while IMAX pulled back sharply in the weeks before “The Odyssey” debuted. Whether IMAX can translate its recent popularity and economic boost to longer-term gains remains to be seen, but the stock is definitely enjoying a moment in the spotlight.

Market Mover Update: The chip-stock bear market deepened a little on Monday as the PHLX Semiconductor Index (SOX) fell more than 2% and closed at its lowest level since May 20. That weakness helped erase the stock market’s early gains as crude oil prices fell more than 7% on the prospect of renewed US-Iran talks.

Today’s numbers include: advance international trade in goods (8:30 a.m.), advance retail and wholesale Inventories (8:30 a.m.), S&P Case-Shiller Home Price Index (9 a.m.), FHFA House Price Index (9 a.m.), Consumer Confidence (10 a.m.), FOMC meeting starts.

Today’s earnings include: Boeing (BA), eBay (EBAY), Enphase (ENPH), Ford (F), Corning (GLW), Coca Cola (KO), NXP Semiconductors (NXPI), Qorvo (QRVO), Repligen (RGEN), Sherwin-Williams (SHW), Seagate (STX), Teradyne (TER), United Parcel Service (UPS), Visa (V).

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