In his No-Huddle Offense segment of Mad Money Wednesday evening, Jim Cramer said while we might not know who won the White House for a few more days, this election had lots of other winners. In particular, Tuesday night was a big win for cannabis, sports betting and ride sharing.
Sports betting was on the ballot in three states, Maryland, Louisiana and South Dakota. Cramer said the winners here are Penn National Gaming (PENN) , MGM Resorts (MGM) , which owns a casino in Maryland, and DraftKings (DKNG) . Let's check out the charts of these three companies.
In this daily bar chart of PENN, below, we can see that prices made a peak in September and have corrected to the downside throughout the month of October. Prices are bouncing but are below the flat 50-day moving average line. Trading volume has been on the light side suggesting that PENN has fallen of its own weight, so to speak.
The On-Balance-Volume (OBV) which uses some simple math to look at volume has been declining the past month telling us that sellers of PENN have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator fell below the zero line recently for a sell signal.
In this daily bar chart of MGM, below, we can see some interesting clues. Prices declined sharply from February into the middle of March. Prices have recovered but have only retraced about half of the decline telling me that the bears are still in control.
A recovery of more than 50% would tell me the bulls were back. The 50-day moving average line has a flat slope and the 200-day moving average line is still bearish.
The OBV line shows a peak in June and no sustained aggressive buying in the months since. The MACD oscillator is hugging the zero line.
In this daily bar chart of DKNG, below, we can see prices bouncing after a deep month long correction. DKNG is trading between the flat 50-day line and the rising 200-day line. The trading volume was heavy in October during the decline telling us that traders voted with their feet.
The OBV line is weak as sellers dominated the action. The MACD oscillator has narrowed towards a cover shorts signal but a buy signal will take some time.
Bottom line strategy: The political landscape for sports betting has improved but I cannot yet say the same thing about the charts of PENN, MGM and DKNG. Let's keep an eye on PENN and keep an open mind on the rest.
