DraftKings inventory pulled again to a traditionally bullish trendline

This commentary first appeared on Forbes Nice Speculations on Wednesday, August 23, the place Schaeffer’s Funding Analysis is an everyday contributor.

The shares of sports activities betting firm DraftKings Inc (NASDAQ:DKNG) have been final seen 3.4% increased at $28.16, as a part of the broader tech sector rally at present. At the moment’s climb may very well be the start of a rebound, given the fairness’s latest placement close to a traditionally bullish trendline.

Particularly, DKNG within the final week pulled again to its 80-day shifting common after spending a major time frame above it. In keeping with information from Schaeffer’s Senior Quantitative Analyst Rocky White, 5 related indicators occurred through the previous three years, with DraftKings inventory notching a 14.6% one-month achieve 80% of the time. From its present perch, an identical transfer would put the fairness again close to its Aug. 4, year-to-date excessive of $34.49

The fairness is underperforming even the SPDR S&P 500 ETF Belief’s (SPY) 3.4% month-to-month dip, with DKNG down 11.3% in August. Given this lackluster technical setup, it’s no shock short-term choices merchants are extra pessimistic than normal. Nonetheless, an unwinding of this pessimism may bode properly for DraftKings inventory; its Schaeffer’s put/name open curiosity ratio (SOIR) of 1.06 stands increased than 88% of studying from the previous 12 months.

Now appears like a superb time to weigh in on DKNG’s subsequent transfer with choices. Its Schaeffer’s Volatility Index (SVI) of 49% stands within the low eleventh percentile of annual readings, implying choices gamers are pricing in comparatively low volatility expectations in the intervening time.