Looking For a Batting Coach for Dick's Sporting Goods

 | Jul 11, 2017 | 11:27 AM EDT
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It can happen to batters and golfers and traders. Dick's Sporting Goods (DKS) has been in a slump since December. Talented coaches can watch an athlete and can often quickly see what is wrong -- a stance, a grip, or whatever. Correcting a problem can sometimes be more difficult as a bad habit may have to be un-learned first. Discovering what is wrong with a stock can be a more complicated issue I think as the marketplace is discounting knowns and unknowns and hopes, etc. six to nine months into the future.

I make no claims to be able to help anyone improve their game or their score, but I think I can give you some tips on DKS. As Warner Wolf used to say -- "Let's go to videotape."

In this daily bar chart of DKS, above, we can see that DKS had trouble trying to break above $62 from September through December. Prices broke down from their sideways trading range in late December, closing below the declining 50-day moving average line. By the end of January the rising 200-day moving average line was broken. A bearish dead cross can be seen in late February as the 50-day moving average line crosses below the 200-day line. The daily On-Balance-Volume (OBV) line peaked in November/December and began to work lower telling us that sellers of DKS were being more aggressive. A bullish divergence is showing up in May and June and early July as prices make lower lows but the momentum indicator makes higher lows.

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Two large declines for DKS can be seen in this weekly chart, above. DKS declined from $60 to $34 in 2015 and in a shorter period of time DKS has declined from $62 to $36 -- roughly the same distance. There is some potential support in the $36-$34 area but I am not sure it will be very durable as prices were only in that area for a few weeks in early 2016. DKS is below the declining 40-week moving average line. The weekly OBV line peaked with prices in November 2016 and you can see a similar peak in May of 2015. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish configuration below the zero line.

In this Point and Figure chart of DKS, above, we can see the downtrend and a potential downside price objective of $35.58.

Bottom line -- with weak daily and weekly charts DKS is likely to struggle in the near-term. A bottom and a reversal is going to take time but I don't expect much more downside weakness.

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