I actually watched a few sports programs over the weekend and that inspired me to take another look at the charts of DraftKings (DKNG) . I last looked at DKNG back on June 18 and wrote that, "I don't get it, but the charts of DKNG are still bullish. Raise sell stops on longs to a close below $35. Our targets are $54 and $66."
Prices closed below $35 by the end June so I assume traders have been stopped out. Let's check and see how the charts look today.
In this updated bar chart of DKNG, below, we can see that prices have crossed above and below the declining 50-day moving average line. The 200-day moving average is rising.
The On-Balance-Volume (OBV) line shows a rise into late June but then a sideways to lower pattern suggesting that sellers of DKNG are slightly more aggressive.
The 12-day price momentum study shows equal highs from July to August even though prices made higher highs. This difference between the price action and the indicator movement is a bearish divergence. This could result in prices drifting back down to the $30 area.
In this Point and Figure chart of DKNG, below, we used daily price data. The chart shows a potential upside price target of $46 but it also shows that prices have been in an uptrend and that the trade down at $36 or lower will break the uptrend.
Bottom line strategy: I have been interested in the stock market since I was 10 years old but for some reason I never was attracted to betting on the outcome of a sporting event even though there are a few teams I am a fan of. The charts and indicators of DKNG are looking a little risky for longs at this juncture in time. Careful.
