Dick's Rebounds After Early Flush

NEW YORK ( TheStreet) -- Dick's Sporting Goods has rebounded from this morning's early flush. A disappointing first-quarter earnings report before the bell pushed shares to a deep gap lower open. On the bell, DKS was trading below its April low before falling much further in the early going. Thirty minutes into today's session, the stock was off over 7.5%, nearly doubling its decline from April's spike high.

Dick's has mounted an impressive recovery from the early lows, but a great deal of damage has been done. The battle is raging now near heavy resistance near the April lows as dip-buyers remain active. This action will push today's final downside volume level to its heaviest since May of last year. As this breakdown plays out, sellers will likely take control and drive DKS lower in the near term.

A further drift down to the stock's 200-day moving average, which has not been tested since the December bottom, will produce a low-risk entry opportunity for patient bulls. The area of the 200-day also includes the powerful breakout point from Jan. 7, when DKS ramped over 11%. The key support zone near the 200-day runs from $51 to $50.

At the time of publication, Morrow had no positions in the stocks mentioned.

Gary Morrow is president of Yosemite Asset Management, LLC, a registered investment advisory firm in San Luis Obispo, Calif. He manages individual accounts through Charles Schwab and runs a long/short hedge fund. Prior to forming Yosemite, Morrow spent 12 years on the floor of the Chicago Mercantile Exchange trading foreign currency and interest rate futures. He holds a bachelor's degree in economics from Ripon College.

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