Shares of Penn National Gaming ( PENN) have suffered a sizable decline from a zenith in September. The valuation has become more compelling, however, and one sell-side fundamental analyst has raised their evaluation to buy with a $49 price target.
Let's check out the charts to see if we can find "three of a kind."
In the daily bar chart of PENN, below, we can see how the shares have been crushed the past year. PENN is trading below the declining 50-day moving average line and below the bearish 200-day line. The math-driven On-Balance-Volume (OBV) line line has been in a decline for the past 12 months.
The 12-day price momentum study in the lower panel of this chart below shows higher lows from November. Improving downside momentum tells us that the pace of the decline has been slowing and typically a slowing pace is a sign that farsighted investors are buying the stock on weakness. This can foreshadow a price recovery.
In the weekly Japanese candlestick chart of PENN, below, we see a mixed picture. The trend is still down as the shares trade below the declining 40-week moving average line but we can see a lower shadow around $30 suggesting that traders have begun to reject the lows.
The weekly OBV line is still negative but the 12-week price momentum study shows us a bullish divergence.
In this daily Point and Figure chart of PENN, below, we can see a downside price target of $18.
In this weekly Point and Figure chart of PENN, below, we can see a $13 target.
Bottom-line strategy: The charts of PENN are showing some green shoots as a fundamental analyst warms to the stock. Aggressive traders could probe the long side of PENN at current levels risking a close below $27. I would look for a rally back to the $45 area.
