Exercise equipment maker Peloton (PTON) were falling sharply Thursday as traders reacted to a plunge in sales and subscriptions. In our September 13 review of PTON we wrote that "Peloton makes a good product but the stock is in trouble and traders should avoid the long side of PTON."
Let's wipe down the equipment and check the charts again.
In this daily bar chart of PTON, below, we used a log-scale to get a better picture of the deep decline. We can see that prices have tumbled hard the past 12 months. Prices just failed at the declining 50-day moving average line.
The trading volume is hard to read while the daily On-Balance-Volume (OBV) line is starting to turn lower. The Moving Average Convergence Divergence (MACD) oscillator has struggled since February.
In this weekly Japanese candlestick chart of PTON, below, we see a weak picture. Prices are in a longer-term decline. The slope of the 40-week moving average line is bearish. The weekly OBV line and the MACD oscillator is bearish too.
In this daily Point and Figure chart of PTON, below, we can see that prices have reached a downside price target of $8.50.
In this weekly Point and Figure chart of PTON, below, we can see that the software is projecting the $3.50 area as a downside price target.
Bottom line strategy: PTON has risen from its opening weakness Thursday but that does not move the needle enough to tempt me to recommend the long side. Continue to avoid the long side of PTON.
