Long Trade in DKNG

The leisure gaming group, as a whole, is setting up in a textbook breakout pattern.

Group moves like this can be powerful. The combination of a group move and a similar pattern from an individual stock within that group can lead to a strong advance higher.

DraftKings is breaking out of a clean base in the beginning of a new Stage 2 uptrend.

If you look at a daily chart, you'll see the stock is up 13% this week but running into longer term resistance.

Ideally, DKNG would consolidate for a few days in the 21-22 range to absorb any supply from sellers looking to exit near 52-week highs.

There are 2 places I would consider buying this stock…

First would be a breakout to new highs above 22 on above average volume. This would signal to me that funds are still buying heavy, and I would want to be along for the ride.

The other potential buy point would be a pullback into the moving averages and this week’s breakout area.

At 19-20 a share, I would be a buyer in DKNG with a sell stop just beneath the 50-day moving average.