PTON Peloton Daily and Weekly Charts; Overbot; Rising Wedges; Negative Divergence Developing; Upper Band Violation; Price Extended

Where's Peloton girl? There's a new commercial on television trying to lure the holiday shoppers but I do not see Peloton girl from last year; instead it is a bunch of new buff people showing what you will look like if you buy this $4K stationary bicycle and pay $50 or more per month. The new ad shows a little yoga mat, perhaps they toss that in after they empty your wallet of all its money. WMT has stationary bicycles for a $100 bucks. After three months when the exercise kick is over, you may as well hang your clothes on a 100 dollar clothes hanger instead of a 4K one.

Peloton reported earings the other night and the analysts and long holders were dancing in the street. PTON was up +12% or +13% in the afterhours. But Friday it ends down -4%. Ouch. Traders were taking the money and exiting stage right. That candlestick is an outside reversal which potends trouble ahead. Tpically, however, price will rally a bit more and then down the road a bit is where the price will remain soggy for a while. There are delays in Peloton shipments continuing; that's not good. After you wait a couple months or more for the machine arrive, you feel like telling them to take it back. The new ad may be trying to line up sales where the deliveries can be made with plenty of time before Christmas and other end of year holidays.

Peloton reports a big jump in users but that likely came from other people in the family starting to use the same machine. People were bored during the lockdown. The jury is out as to whether Peloton will develop into a cult-like stock like Tesla. Time will tell. The charts are much the same as a month ago when they were posted. The top is not in until that MACD line goes neggie d on the weekly and that has not occurred as yet.

On the daily chart, the red lines show all the negative divergence in play; that is why price received the Friday spanking. The purple arrows show the tight band squeeze, which was higher, and price violates the upper band so the middle band at 76 and lower band at 58 are on the table. The overbot conditions also create negativity. The ADX is trying to show a strong trend higher again but it can go either way. The rally was deemed a strong trend in May, June, July but it petered out in early August. The ADX is lower than prior tops but price is higher which is more negative divergence (bad for price). The Aroon green line is overbot and red line oversold both signaling a move towards selling as time plays out. So the daily chart is not in good shape. Price should remain soggy a few days, perhaps price tags 76. Price is extended above the moving averages so a mean reversion lower is needed.

On the weekly chart, the overbot conditions, rising wedge, neggie d (red lines), upper band violation all conspire to create negativity. However, the money flow and MACD line are long and strong so the top is not in on the weekly basis as yet. After hte weakness on the daily chart plays out during the few days and say week ahead, price should come back up for another matching high on the weekly basis. 

There will likely be two jog moves required on the weekly one to turn the money flow neggie d and the other to turn the MACD. Thus, one week down, the next up, then down, then up, and this would be the potential top in PTON and the start of a multi-week pullback. The top on the weekly chart will likely occur later this month or early October. That would be the time to short it when the money flow and MACD line negatively diverge as price comes up again for matching highs, on the weekly basis.

The ADX on the weekly chart heads higher identifying the rally on the weekly chart as a strong trend higher. The ADX would be expected to top out and roll over during the next couple-three weeks as price tops out. The Aroon green line is pegged at 1 hundo and the red line at zero. We have a winner. PTON is at maximum euphoric bullishness on the weekly basis; the hype and joy in owning Peloton cannot become more enthusiastic; it is off the charts. You know what happens after the big party; yes, the big hangover. Probably at month-end would be a good time to think about shorting it; you will have to look at the charts. Keystone is not in it long or short right now but will look to short it in 2 to 4 weeks time when the MACD on the weekly goes neggie d. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.