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Will Dicks Sporting Goods (DKS) Rebound At Least 7%

Published June 7, 2017
10:30 PM

Dicks Sporting Goods (DKS) has been on a bull run since November 2008. On multiple occasions through this bull, three of the technical indicators discussed below are at the same or lower levels, that they are now. These instances are resulted in gains for the stock. I have laid out the reasons and levels to which the stock may rise while it most likely ends is recent bear trend and restarts it bull.



Dicks Sporting Goods Chart From TradingView.com

When we look at technical indicators, the relative strength index (RSI) is at 23.2053. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI has the stock oversold.

The positive vortex indicator (VI) is at 0.7757 and the negative is at 1.1798. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The positive and negative values are currently at extreme levels and the stock always rebounds.

The stochastic oscillator K value is 9.0137 and D value is 10.7460. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is currently oversold. The K value will soon cross above the D value. When this occurs the stock should begin to move higher.

Since the current long-term bull began, there have been four occasions when the RSI was at or below its current close at the same time the negative VI was at its current height and the stochastic was oversold. All similar instance led to a significant gain for the stock. The median gain occurs over 12 trading days with a median rise of 12.34%. The minimum gain on these occasions was 8.51%.

Furthermore, 17 occasions in the current long-term bull had the stock bounce off clearly identified support levels. I define a support level as one the stock uses as a bottom on a minimum of three occasions. The median gains from these bounces off support have resulted over 16 trading days with a median move of 15.69%. The minimum gain from these levels is 8.51% This 8.51% also occurred when the RSI and positive VI value were at or below their current levels. A gain of 8.51% is probable in this instance as it encompasses a bounce off strong support and has the RSI and VI at extreme levels.

Considering the RSI, VI and stochastic levels, the overall direction favors a move to the upside. Based on historical movement compared to current levels and the current position, the stock could gain at least 7% over the next 27 trading days if not sooner.

DISCLOSURE: I currently do not have positions in the stock mentioned above. I do not plan to initiate a position within the next 72 hours. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. Make sure appropriate research is conducted prior to taking any risk in a marketplace.

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