Peloton Has Disappointed: Take Your Leave and Sell

We're checking in on the PTON charts again.

Callers into Tuesday's Mad Money program kept Jim Cramer busy during the Lightning Round segment. One caller  asked Cramer about his thoughts on Peloton (PTON) . "They have done acquisitions in an attempt to diversify, but they've had a big run. I'm moving on."

The last time we wrote about PTON was on March 9, where we wrote that "March 5th was the low day on PTON and today we may well see a close above the high of the low day. This is a quick-turning reversal pattern on bar charts. Aggressive traders could go long PTON here and risk a new low close."

Let's check on the charts again today. 

In the daily Japanese candlestick chart of PTON, below, we see a mixed picture. The shares have tested the rising 200-day moving average line a few times this month. The line has held so far but that may not last. The trading volume has not increased significantly on these tests suggesting that technically oriented buyers are not stepping up aggressively.

The On-Balance-Volume (OBV) line has drifted lower from late December as there appears to be a slight increase in selling. The Moving Average Convergence Divergence (MACD) oscillator moved below the zero line in February for an outright sell signal and only now shows a tepid cover shorts buy signal. 

 

 

In the weekly Japanese candlestick chart of PTON, below, we see a mixed picture. Prices are holding around the rising 40-week moving average line. Trading volume has been light so it seems like traders do not consider this test of the 40-week line as a buying opportunity.

 

The weekly OBV line is still neutral at best. The MACD oscillator is in a bearish alignment.  

 

 

 

In this daily Point and Figure chart of PTON, below, we can see a potential downside price target in the $86 area. 

 

 

 

Bottom-line strategy: Traders who went long on March 9 as a result of our recommendation should now take profits and sell. The anticipated rebound has not worked out and the Point and Figure chart suggests a further decline is possible.

 

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