PTON Peloton Daily and Weekly Charts; Upward-Sloping Channel; Overbot; Rising Wedge; Negative Divergence Developing

Peloton is an active stock with millions in shares changing hands each day. PTON is a youngster coming up on its one-year anniversary. Therefore, the monthly chart remains undefined (not enough history as yet on the monthly basis to calculate moving averages or identify chart patterns). The weekly and daily charts, however, do tell the path ahead for the exercise bike maker.

Last Fall, the general thinking was who is going to buy a stationary bike that costs several thousand dollars and then $50 or $60 per month for the programming and instruction. Of course, the wealthy class will buy one and place it in the rugged basement of their McMansion to say they have one, but other than that, few have money to throw away on such a frivolous device. After all, you can exercise for free, right? Simply place your overweight fat butt on a bicycle and start peddling, as Queen would say. "Get on your bikes and ride!"

But Peloton proves the naysayers wrong. The coronavirus (COVID-19) pandemic hits at the start of this year and Americans are forced into lockdown. Peloton sales go through the roof. In business, you must always understand it is always better to be lucky than smart. Bored Americans, spending all their time at home these days, decide to stretch the family budget and buy a Peloton machine. What good fortune for the shareholders.

The Peloton Girl provided lots of attention and publicity at the end of last year. A television commercial shows a husband buying the bike for his wife. She fawns over the gift and works hard to take her finely toned body and make it an even more finely toned body. She bats her eyelashes at her great husband that gave her the bike. People thought the commercial was sexist. The pretty Peloton Girl, Ryan Reynolds, enjoys her 15 minutes of Andy Warhol fame. There is no such thing as bad publicity. Note to men; do not buy your honey any exercise device unless she tells you to, otherwise, you will be spending many nights sleeping with Fido out in the garage.

What do the charts say? You can immediately see the neggie d spankdown in progress on the daily. The tight standard deviation bands (purple arrows) squeeze a move higher in price over the last couple weeks (tight bands forecast a big move but do not predict direction). The red rising wedge, negative divergence (red lines) and RSI, stochastics and money flow coming off overbot levels, create the negative vibe and the spankdown off the top occurs. It is only a couple days of selling so no biggie. More downside would be expected and price is pausing now at the lower trend line of the blue upward sloping channel. If price loses the lower rail, that 65-67 area, she will likely drop like a rock. However, note the indicators dropping but none are below their lows (thin red lines). This hints that buying strength remains and this initial drop off the top will likely not have much legs.

This thinking gels with the weekly chart that displays the all-time record price high this week at 73.21. Keystone's 80/20 Rule says 8's lead to 2's on the way up so a few closing prices above 80 would open the door to 120 but do not get your hopes up for that if long. You can clearly see the negative divergence with the RSI, histogram, stochastics and money flow on the weekly chart. This negativity conspires with the daily chart to create the pullback now in the daily time frame.

The MACD line on the weekly chart, however, is long and strong. This tells you that after an initial pullback on the weekly chart, price will come back up for another matching or higher high, in this weekly time frame, and the top will be in when the MACD goes neggie d, probably a couple weeks out.

What does all that windbag stuff above mean? PTON is receiving a neggie d spankdown right now on the daily chart, however, price will recover in the daily time frame and come back up again for a matching or higher price high to satisfy the MACD on the weekly chart that is still providing upside juice to price. PTON will likely be a good short play in a couple weeks since once the weekly chart tops out, that will lead to a multi-week decline. So sogginess for a few days then a recovery for a few days and say another price high next week or early in the week of 8/17/20. At that time, see if the MACD line goes neggie d to identify the top, or not. You must wait for all the indicators to negatively diverge to know the multi-week top is in. Keystone has no position in PTON long or short right now but will play it short in a couple weeks when the weekly chart tops out and begins a multi-week decline. In September or October, it will not be surprising to see PTON in the 48-55 price range. 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.

Note Added 7:13 PM EST: Ascent Wealth Partners managing director Todd Gordon forecasts more upside for PTON in an article on CNBC. Of course he does since he owns it long. So does Comcast-NBCUniversal which is the parent of CNBC. Gordon expects a new leg higher for Peloton since people will be stuck inside at home during wintertime. PTON reports earnings on 9/10/20 and Gordon says it will serve as an upside catalyst. It is nothing but blue skies, rainbows and roses for Peloton Girl. Who do you think is correct? Good ole Keystone or Mr Gordon?.