Buy the Dip on This Retailer Before Earnings

DKS' pullback from record highs could present a buying opportunity

Deputy Editor
May 21, 2024 at 2:32 PM
facebook X logo linkedin


Dick's Sporting Goods Inc (NYSE:DKS) was last seen down 2.7% to trade at $188.58, after Wedbush reiterated its "neutral" rating and TD Cowen cut its price target by $2 to $224. The specialty retailer has taken a 16.6% haircut off its April 1 record high of $225.79, but, as contrarian signals mount, could be poised to finish May with a flourish. 

Dick's is set to report earnings on May 29, before the market opens. After the last eight reports, DKS closed higher in six of the following sessions, including a 15.5% pop this past March. This time around, the options pits are pricing in a next-day swing of 11.3%, slightly larger than the 9.4% move the stock has averaged over the last two years. 

The retail stock's recent drawdown has DKS testing a historically bullish trendline.  Per Schaeffer's Senior Quantitative Analyst Rocky White, the security has come within one standard deviation of its 80-day moving average four times over the past three years, defined for this study as having traded north of this trendline 80% of the time in the past two months, and in eight of the past 10 trading days. One month later, the stock was higher 75% of the time after these signals, averaging a 5.8% return. 

DKS also has plenty of short squeeze potential. Short interest represents 10.1% of the stock's available float, and would take shorts nearly five days to cover at its average pace of trading. 

DKS May21

 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!