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This Is Where Peloton Stock Needs to Hold Support After Earnings Dip

Peloton stock is falling after earnings. While it's losing the monthly low, the stock has one last key support area it has to hold.

On a day dominated by headlines from the Federal Reserve, Peloton Interactive  (PTON) - Get Peloton Interactive, Inc. Class A Report continues to garner attention, down almost 9% on Friday.

Shares fell to multi-month lows following earnings as the stock’s been unable to shake its early losses.

Despite beating revenue expectations, losses were more than twice what analysts were expecting and more than tripled vs. the same quarter a year ago.

A reduction in the price of its fitness bike, along with subpoenas from DHS and the DOJ aren’t helping matters.

As one Real Money contributor pointed out earlier, the charts were weakening before Friday’s post-earnings slide.

The question now: How far will Peloton stock fall before support comes into play?

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Daily chart of Peloton stock.

Daily chart of Peloton stock.

Like most growth stocks, Peloton exploded to new highs early in the year. That rally was met with a painful and rapid pullback in February, with shares ultimately bottoming in May after a painful bear market.

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After bottoming near $80, shares quickly burst back up through the major moving averages and topped out near $128, up almost 60% from the lows.

This area has gone on to act as resistance, while Peloton stock has bounced between its major moving averages.

It’s been a busy week for the stock. Shares broke to new lows for August on Monday, then rallied hard the next two days. On Thursday, the stock tried to reclaim the 200-day moving average, but was harshly rejected from this measure and closed lower on the day. Now we’re getting a gap-down reaction to earnings.

Amid the move, Peloton stock is making another new low for August. It’s also taking out the July low, giving us a monthly-down rotation, a bearish technical development.

From here, the setup is a bit tricky.

I will be watching the prior August low at $105.27, followed by the July low at $108.10. While reclaiming the former will be beneficial for the bulls, the latter is more crucial.

Above both levels and aggressive buyers can hold Peloton against its post-earnings low, currently at $102.91. Over $108 and perhaps the stock can go on to fill Friday’s gap.

If it can’t reclaim the July and August lows, Peloton stock will need to find support in the $100 to $104 area. Should it lose $100, more downside becomes evident, potentially opening the door down to the $80s. The 21-month moving average is currently near $85 and may act as support should the stock fall that far.