Well, Penn hasn't been hot only recently - shares have been on fire for an entire year now after the stock bottomed out at $3.75 last March.
While DraftKings has been on a little bumpier of a ride - sinking more than 40% in October alone - it too has been on a strong bull run.
Of course, both have multiple catalysts in play. Penn National Gaming has the reopening trade working in its favor, as casino stocks like Wynn Resorts (WYNN) - Get Report and MGM Resorts (MGM) - Get Report rally higher as well.
Both DraftKings and Penn are also benefiting from online sports betting, which continues to gain momentum on a state-by-state basis.
Finally, they both have March Madness to look forward to. With the tournament resuming this year after being cancelled in 2020, both companies have a big opportunity to capitalize as bets are rolling in.
Let’s look at the charts.
Even though tech stocks have really suffered through this bout of rising interest rates, DraftKings stock can’t seem to be bothered.
That's true even after the company raised additional capital earlier this week.
Each dip to the $56.50 area was met with responsive buyers who enthusiastically bid the stock back up. In those cases - highlighted on the chart with blue circles - DraftKings was able to stay above its 10-week and 50-day moving averages.
Shares continue to trend higher, but are struggling with 161.8% extension from its short-term range, near $72.25.
If the stock can push above that level and close at new highs above $74.10, then the long-term 161.8% extension is in play near $82.
On the downside, I want to continue seeing the 10-week and 50-day moving averages hold as support. Below puts $56.77 back on the table.
Trading Penn National
What else can we say about Penn stock at this point? At the recent high, shares were up more than 36-fold from the low a year ago. It's no surprise it's being added to the S&P 500.
Shares hit an all-time high of $142 on Monday, but are now down 21.5% from those levels. Given its year-long rally, buyers are justified if they hesitate to buy the dip.
That said, Penn stock is pulling back into support.
The stock failed to hold the 21-day moving average as support for the more than one day, while also cutting right through the 61.8% retracement. However, it’s trading down into what has been solid support for months now, the 10-week and 50-day moving averages.
Bulls are looking for a rebound now, preferably one that sends shares back above the 21-day moving average and the $129 level. If it can do that, Penn stock may challenge the high at $142 and potentially rally to the 161.8% extension near $150.
On the downside, a break of support could put the $95 to $100 area in play, where it will likely be met with strong support. Not only has that area been range support, but the 100-day moving average is also nearby.