Dick's Sporting Goods Reports in Recovery Mode

Dick’s Sporting Goods, Inc. (DKS) is a retail store to visit when purchasing authentic sporting goods including apparel, footwear and a popular array of accessories. The stock has been above a “golden cross” since March 6 and has a positive weekly chart.

Dick’s Sporting Goods stock has been consolidating a bear market decline of 62% from its all-time intraday high of $62.88 in November 2016 to its 2017 low of $23.88 set in November. The stock closed Monday, Aug. 27, at $36.32, up 26.4% year to date and in bull market territory at 25.7% above its 2018 low of $28.90 set on Jan. 2. The stock set its 2018 high of $38.99 on May 30 and is 6.8% below that level.

Analysts expect Dick’s to report earnings per share of $1.04 to $1.06 when the sporting goods retailer releases results before the opening bell on Wednesday, Aug. 29. A concern is that cool early-spring weather could slow sales. Same-store sales will be an important metric, but forward guidance should be the focus. On the positive side, online sales should be showing solid gains. (See also: Retail Funds Break Out to All-Time Highs.)

The daily chart for Dick’s Sporting Goods

Daily technical chart showing the performance of Dick's Sporting Goods, Inc. (DKS) stockCourtesy of MetaStock Xenith

The daily chart for Dick’s Sporting Goods shows that the stock has been above a “golden cross” since March 6, when it closed at $32.47. A “golden cross” occurs when the 50-day simple moving average rises above the 200-day simple moving average and indicates that higher prices lie ahead. When this positive formation is in place, a trading strategy is to buy weakness to the 200-day simple moving average, which was doable between March 8 and May 29, when the average was $30.07. This was a buy just before the huge price gap higher, when the stock spiked on a positive earnings report released on May 30. This drove shares to the 2018 high of $38.99. Since then, the stock has been moving sideways. The stock is between my quarterly pivot of $34.85 and my monthly pivot of $37.32, with my semiannual pivot at $36.55.

The weekly chart for Dick’s Sporting Goods

Weekly technical chart showing the performance of Dick's Sporting Goods, Inc. (DKS) stockCourtesy of MetaStock Xenith

The weekly chart for Dick’s is positive, with the stock above its five-week modified moving average of $35.34. The stock is below its 200-week simple moving average of $44.09, which is also the “reversion to the mean.” This average was last tested during the week of May 12, 2017, when the average was $49.95. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 58.24 this week, up from 54.97 on Aug. 24.   

Given these charts and analysis, investors should buy Dick’s Sporting Goods shares on weakness to the 200-day simple moving average of $32.87 and reduce holdings on strength to the 200-week simple moving average of $44.09. In between are my quarterly, semiannual and monthly pivots at $34.85, $36.55 and $37.32, respectively. (For more, see: Demand Strong in Sporting Goods.)

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