DraftKings (DKNG) has been in rally mode from last March but with the end of March Madness are we going to have a fall off in business and a correction in the stock?
Let's check out the charts to see if we can handicap the situation.
In the daily bar chart of DKNG, below, we can see that the shares have been moving higher and bounced off the rising 50-day moving average line the past three months. The slower-to-react 200-day moving average line is rising and intersects around $49.
Trading volume has been decreasing since October and the On-Balance-Volume (OBV) line peaked in early October. Its decline is suggesting that sellers of DKNG have been more aggressive. The 12-day price momentum study shows equal highs in February and March as prices made higher highs. This is a bearish divergence but we need to remember it has not been playing out for a long period of time.
In the weekly Japanese candlestick chart of DKNG, below, we can see an evening star top reversal pattern in early March.
Trading volume weakened into the first quarter highs and the OBV line has rolled over the past two months. The MACD oscillator is crossing to the downside for a take profit sell signal.
In this daily Point and Figure chart of DKNG, below, we can see that the software is projecting a potential downside price target in the $43 area.
In this second Point and Figure chart of DKNG, below, we can see an upside price target in the $80 being projected.
Bottom-line strategy: I must admit that I am not a fan of betting though I have participated in office pools, which are not the same thing. Looking at the charts of DKNG I would wager that prices could correct in the short-run before further gains in the long-run.
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