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DraftKings In A Very Dangerous Position

By Tim KnightStock MarketsMay 07, 2021 04:11PM ET
www.investing.com/analysis/draftkings-in-a-very-dangerous-position-200578530
DraftKings In A Very Dangerous Position
By Tim Knight   |  May 07, 2021 04:11PM ET
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This is a good real-life example of how charting can be very helpful in giving warnings that something is going wrong.

Below is the chart of DraftKings Inc (NASDAQ:DKNG) without the past couple of months. This stock was one of the very few SPAC offerings which was actually thriving. It had a nice saucer pattern, followed by a right triangle. The breakouts were clean, and the stock was making steady highs.

DraftKings Chart Up Until February 2021.
DraftKings Chart Up Until February 2021.

There were two big “heads up” that this bullish dream was failing. The first was when prices slipped below that horizontal breakout line. Take note that the support turned into resistance once it was broken.

The second warning, which I’ve circled, was the break of the trendline. So even if you ignored the first warning, you still could have avoided a subsequent 17% decline in price (so far……..) with the second warning.

DraftKings Chart.
DraftKings Chart.

And, judging from the longer-term chart, I’d say DKNG is in a very dangerous position.

Long-Term DraftKings Chart.
Long-Term DraftKings Chart.

I bellyache a lot about charting not working in this market, but to be honest, that’s more of an expression of my frustration than a reality that charts actually have ceased to be useful. I wanted to offer this concrete example of how a stock was making clean patterns on the way up, and was offering clean warnings on the way down.

DraftKings In A Very Dangerous Position
 

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DraftKings In A Very Dangerous Position

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Comments (4)
Solomon Lalani
Solomon May 09, 2021 10:46AM ET
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Good analysis. Question: is bellyache one word? :)))
John Lakran
John Lakran May 07, 2021 4:58PM ET
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With 45M shares traded today I think it held up well. I can imagine lots of computer trading bc of the 200dma and stops but I think DK will be back Long Term it's a winner.
Joseph Obrzut
jzut May 07, 2021 4:38PM ET
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Gimme some at 40 down to 35.
Tammy Ligocki
Tammy Ligocki May 07, 2021 4:17PM ET
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Thank you. I’m still sitting on one call expiring 5/21. I’m not sure why I kept the one...besides all the states coming on board & the new chatting on the app.
 
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