A Momentum Analysis of $DKNG and $PYPL
Unbiased, data-driven and actionable insights to help you cut through the noise
Hello, and welcome back to My Weekly Stock!
Today, I'm excited to bring you my momentum analysis of 2 stocks: DraftKings Inc. ($DKNG) and PayPal Holdings Inc (PYPL)
My intent is to cut through the market noise and offer you unbiased, data-driven insights you can act on.
Let's get started!
My Approach
I built my momentum analysis based on 3 sections:
1. Performance: I like to see stocks trading within 5% of their 1-year high, indicating strong momentum and minimal resistance. Winning stocks also typically exhibit superior performance vs. their peers across multiple timeframes.
2. Trend: I use the 9 and 21 (or 30) exponential moving averages (EMAs) on the 4-hour, daily, and weekly charts to assess the trend’s strength. Strong trends typically involve the EMA9 above EMA21, the stock trading above both EMAs and rising trend lines. I score each stock’s chart out of 5, with a score above 4 suggesting a solid trend.
3. Key Levels: Support and resistance levels are critical technical analysis components, serving as indicators for potential market reversals or continuations. My preferred method is to look for previous highs and lows, any levels where the trend has historically changed, and price gaps.
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DraftKings Inc. (DKNG)
Sector: Consumer Cyclical | Industry: Gambling
PERFORMANCE
DKNG has delivered outstanding performance over the past year, nearly doubling in value. It has significantly outperformed its sector and peers on a one-year basis, though its recent performance has been more in line.
I used the following benchmarks:
Churchill Downs, Inc. (CHDN)
Light & Wonder Inc (LNW)
Consumer Discretionary Select Sector SPDR (XLY)
VanEck Gaming ETF (BJK)
TREND
The long-term trend remains strong, yet signs of weakness are beginning to emerge on the daily chart and, more prominently, on the 4-hour chart.
Weekly chart: Strong
Daily chart: Mixed
4-hour chart: Weak
KEY LEVELS
Support:
$38-40
$32-30
$25
Resistance:
$45
$65
$75
My Take: A bullish play for the patients and those who can stomach the volatility
DKNG experienced outstanding returns last year, and the overall shape of its long-term trend is strong. However, I see some overhead resistance as we need to work back through the previous all-time highs around $75, so this will likely be a long and bumpy ride if we get there.
I also have some concerns when looking at shorter timeframes that suggest a possible short-term pullback or consolidation. However, as long we do not break below $38, the bullish setup remains intact.
Overall, I like the long-term setup on DKNG. Still, this play calls for patience and a certain stomach for volatility.
Do you enjoy this analysis? Interested in a personalized portfolio audit? Email me at contact@myweeklystock.com, and let me review all your holdings!
PayPal Holdings Inc (PYPL)
Sector: Financial | Industry: Credit Services
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