Time to say goodbye to this good buy? Here’s my take on DraftKings ($DKNG) (June 02, 2020)
DKNG
This is probably the last time, at least in this run, that I am going to cover DraftKings ( NASDAQ: DKNG ). At some point you have got to say, all right, I’ll take the money and run. But this is why I wanted to mention this: The stock printed, it opened higher and then it printed a higher intraday high today. But the low also eclipsed yesterday’s intraday low. This came a little bit below 40.00, yesterday this was above.
Also, I used to call a chart like this a gap and crap, where the stock gaps up and then craps lower. In the past any gaps that this has had, and it hasn’t had many, have typically closed higher and so this is a change in character. You look at all this volume here, massive volume in this.
At some point it’s time to hit the exit and so here are my thoughts:
First of all, you don’t have to sell all at once, just like you shouldn’t be buying all at once
Second of all, the uptrend is still intact. Yes, we got a little dip today that eclipsed yesterday’s but the uptrend is still intact. Look at where this stock is, the stock is up in the winner’s circle, which is where I like it to be, as long opposed to down here in the penalty box like so many other stocks, so we like this.
So the uptrend is intact, it is still trading above the upper Bollinger Band for much of the day as has been the case over the last week or so, so this is a monster stock. It is really, really working well. And so what I am not doing here is calling a top and saying, okay, it’s time to get out. Doing that here would have cost a lot of money; you are selling the thing, you are saying, well okay, this is the end of the move for DraftKings ( NASDAQ: DKNG ) so I am out of here.
Sure the stock pulled back and then if you didn’t get back in you missed a big run. We could say the same thing about here or here and even here. So I guess the point that I am making is, it looks to me like the stock is due for a bit of a sideways rest. And then after that, we don’t know; we don’t know if the stock does that or if it does that.
I am just looking at this as a good opportunity to take some stock off the table. If you want to take it all off it has been a heck of a trade for you, congratulations. If you want to give it more room to run, let it go a little bit more, you can certainly do that. But lower your cost basis in the remaining shares by taking profits in part of your position. So that is the way I would be trading DraftKings ( NASDAQ: DKNG ).
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