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Buy the Dip in Dick's Sporting Goods? Have a Look at the Chart

Dick's Sporting Goods is dipping on earnings. Is it a good stock to buy on the dip? Let's look at the chart to see where key support sits.

Dick’s Sporting Goods  (DKS) - Get Dick's Sporting Goods, Inc. Report wasn't feeling the post-earnings love on Tuesday.

While well off the lows (and notably above the premarket lows), Dick’s still was down more than 5% on the day.

That’s despite the company beating fourth-quarter earnings and revenue expectations.

Sales jumped 20% year over year to $3.13 billion, while same-store sales increased more than 19%.

It was a pretty impressive quarter, but as we’ve seen with Target  (TGT) - Get Target Corporation Report, Walmart  (WMT) - Get Walmart Inc. Report, Costco  (COST) - Get Costco Wholesale Corporation Report and other retailers, it simply wasn't enough for investors. 

Not that the companies' outlooks have necessarily been bad, but they apparently lack what investors were hoping to see.

As a result, these stocks are struggling for upside momentum in the short term, even if the long-term story remains strong. Let’s look at the chart for Dick’s Sporting Goods.

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Trading Dick’s Sporting Goods

Daily chart of Dick's Sporting Goods stock.

Daily chart of Dick's Sporting Goods stock.

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The stock had a very impressive rally in October, before pulling back over the next few months and powering higher at the start of 2021.

For most of the year, shares have been trading really well. Now we have an attractive, albeit sloppy pullback to the 50-day moving average.

Ahead of earnings, Dick’s Sporting Goods put together a powerful two-day low-to-high rally of 17.5%. With that in mind, some post-earnings weakness on Tuesday shouldn’t come as a surprise.

Here’s how to read this one, though.

On the downside, we have three long wicks in a four-session span (highlighted on the chart with a blue circle). Support continues to come into play around $68 and the 50-day moving average.

Should these two marks fail - as in, the stock closes below last week’s low at $66.76 - we have to be on the lookout for a possible test of the 100-day moving average and the $63 level.

On the upside, the read is also pretty straight-forward: watch the 10-day and 21-day moving averages.

So far these measures have been resistance in the post-earnings price action. A move above them puts this week’s high in play at $78.44, followed by last month’s high just over $80. 

Above all of these levels could put the two-times range extension in play near $86.