What's the Dave & Buster's PLAY as Earnings Approach?

Let's take a close look at the charts of the entertainment and dining venue company.

Dave & Buster's Entertainment Inc. (PLAY) is scheduled to report their latest quarterly figures on Tuesday before the market opens. In full disclosure I visited the Dave & Buster's near Times Square in New York City and my wife and I had a good time many years ago. Let's see if that positive experience extends to the charts and indicators.

In the daily bar chart of PLAY, below, we can see that the big-picture trend of the shares has been sideways for the past 12 months. Buying interest has developed in the $32-$30 area a number of times with late May being the most recent experience. Prices recently rebounded to the underside of the 200-day moving average line but are well below the declining 50-day moving average line.

The trading volume did not insignificantly increase in late May as prices jumped so I am taking the recent strength with some skepticism. The daily On-Balance-Volume (OBV) line shows some "interesting" movement. First, we can see that the line has risen from August even though prices have moved sideways. Second, we can see that the OBV line has moved sideways from early April as prices weakened. If the OBV line is correct that buyers of PLAY have been more aggressive while prices have declined it means that either they have a strong conviction about the stock or they could be very disappointed if prices break down below $30.

The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory but a cover shorts signal can be seen in late May.

 

In the weekly Japanese candlestick chart of PLAY, below, we see a mixture of clues. There are upper shadows in March and April that tell us that traders are rejecting the highs. We can also see a hammer pattern in May that lacks bullish confirmation.

 

The weekly OBV line shows a decline from March 2021, which is much different from the daily OBV line. The MACD oscillator is just above the zero line and pointed down.

 

 

In this daily Point and Figure chart of PLAY, below, we can see a potential downside price target of $14.

 

 

In this second Point and Figure chart of PLAY, below, we used weekly price data. Here the chart suggests the $12 area as a target.

 

 

Bottom-line strategy: I have no special knowledge of what PLAY will report for earnings but the charts look vulnerable and traders should avoid the long side.

 

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