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Peloton Charts Flash Bullish Despite Looming Apple Competition

Peloton is flicking bullish as the stock flirts with a move higher despite Apple entering the virtual fitness subscription business.

Peloton  (PTON) - Get Peloton Interactive, Inc. Class A Report was down more than 4% in premarket trading Thursday but the stock has since seen a change in sentiment.

The stock is now up about 2% on the day despite the looming threat of Apple  (AAPL) - Get Apple Inc. (AAPL) Report entering the virtual fitness subscription space.

At one point in the fourth quarter, Peloton found its share price struggling after its September 2019 initial public offering. And while shares struggled in March amid the coronavirus selloff, the pandemic has fueled a powerful rise in its share price.

Despite being 10% from its highs, the stock is still up more than 260% from its lows earlier this year. Stay-at-home orders and at-home workout solutions have helped fuel momentum in Peloton’s business, as well as the stock.

These trends are likely what’s put virtual fitness classes on Apple’s radar. It’s also what pushed Lululemon Athletica  (LULU) - Get Lululemon Athletica Inc (LULU) Report to acquire Mirror for $500 million in June.

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Trading Peloton Stock

Daily chart of Peloton stock.

Daily chart of Peloton stock.

Based on the pre-market action, investors were likely looking to buy the dip down towards the 50-day moving average. Shares never even broke $61 though, as we’re now looking at a stock trying to reclaim the 20-day moving average.

Now the setup gets interesting. If Peloton stock can reclaim the 20-day moving average, it will also put a daily-up rotation in play over Wednesday’s high at $65.73. From there, the 261.8% extension will be on the table at $68.28.

If Peloton can reclaim these key marks in the face of the Apple news, I have little doubt it will get bulls talking about a run toward the current high near $72.50. Above that and the three-times range extension is in play at $75.66.

Should the 20-day moving average reject Peloton stock, look for a possible move below Thursday’s low. That would put the 50-day moving average in play.

Below that could ultimately put $50 and the 161.8% extension in play. There the stock should find a decent level of support, given that this area acted as resistance throughout May and June.

However, I wouldn’t expect that level to come into play before its mid-September earnings report unless we see some strong selling pressure in the overall market.