📉 $DKS Craters on Foot Locker Deal — Buy the Dip or Stay Away?
Breaking Down the Chart After the Market Slams Dick’s Sporting Goods
Hey traders and investors —
Let’s talk about $DKS. It got crushed last week — while Foot Locker ($FL) soared — after Dick’s Sporting Goods announced it was buying FL in a $2.4 billion deal. You’ve probably seen the headlines, but let’s cut through the noise and actually look at the chart.
The story here isn’t just about earnings or takeover math — it’s about how the market really feels about this acquisition and what the chart is telling us behind the scenes. This one’s a classic case of strong fundamentals getting overshadowed by Wall Street side-eye over deal terms, dilution risk, and execution headaches.
So I’m drilling down into this chart, walking you through the indicators and price action step-by-step — and how I’d personally approach this one if I were trading the stock.
🧠 The Setup: What’s Going On?
Here’s the short version:
Dick’s ($DKS) announced they’re buying Foot Locker ($FL) for $24/share — an 87% premium.
DKS shares sold off because the market thinks they’re overpaying and may need to issue stock.
At the same time, DKS posted a great Q1 with comps up 4.5% and EPS guidance ahead of estimates.
Foot Locker’s results? Ugly. Negative comps, negative earnings, and mall-heavy exposure.
So we have a fundamentally strong company making a high-risk acquisition. The market’s now trying to figure out if DKS can pull it off without screwing up what was already working.
Now let’s see what the chart is telling us...
📊 Chart Analysis:
🔻 Price Action: The Gap and the Reaction
Take a look at May 15th — boom. A massive gap down on volume. That wasn’t retail traders panicking — that was institutional money bailing. You don’t get that kind of spike in volume without some serious unloading.
That sharp candle took $DKS from just under $200 down into the mid-$180s, snapping a steady 3-month base.
The price found temporary support around $180 and bounced to close Friday at $184.02 — but this wasn’t a strong recovery. It’s more like a pause before the next move.
🔍 Support & Resistance Levels
Support: $166.37
This is the next major level, and it’s about 9.6% below current price. That was the 52-week low and could act as a floor if things deteriorate further.Resistance:
$236.37 — 28% above current price
$253.13 — the top end of the prior range
These are your “if everything goes right” targets — and we’re a long way from there right now.
📉 Trend Indicators: Bearish and Sloping Down
Moving Averages: The 50-day, 100-day, and 200-day are all above the current price and sloping downward.
That’s classic bearish structure — the trend is not your friend here.
The price has rejected all major moving averages and now sits under all of them.
🟥 Trend Strength: Weak
The Trend Strength score is 3/10 — that’s weak.
It means DKS is underperforming 70% of the market. Institutions are not rotating into this name right now. They're pulling money out.
🧮 Volume: Confirmation on the Selloff
That big red candle came with huge volume — over 10M shares traded on May 15, way above average.
This wasn’t a fluke. It was a message.
🟠 Momentum: Cooling Off
Momentum indicators are rolling over hard.
MACD has crossed bearish.
RSI dipped but isn’t yet oversold — it’s sitting in no man’s land around 45.
Translation? There’s room for more downside.
🧭 How I’d Trade This –
This one’s tricky. So here’s how I’d play it, depending on whether you’re trading it short-term or investing for a turnaround.
📈 For Traders (Swing to Short-Term)
Entry: I’m not entering here. I’d wait until one of two things happens:
A clean bounce off $166.37 with confirmation (a green close + higher volume).
Or a reclaim of the $200 level, with momentum indicators turning positive.
Target: If you get a bounce off $166 and volume confirms it, I’d target $195-$200 as your first zone. If it pushes higher, $215 is your stretch target.
Stop Loss: $162 — I’m not giving this more than a 2.5% cushion below key support. If it fails that, step away and reassess.
🏗️ For Investors (Longer-Term Turnaround Play)
This one’s for the patient.
Entry: I’d consider scaling in between $170 and $180, assuming you believe in DKS’s turnaround story and ability to integrate FL.
Thesis: You’re betting that the selloff is overdone, and DKS’s history of execution and clean balance sheet will let them turn this ship.
Exit Plan: Look to trim between $215 and $225 if the stock recovers. Hold longer if the acquisition proves accretive and margins improve post-integration.
🧾 Wrapping It Up: Risk vs. Story
This $DKS move is a classic “good company, bad headline” setup. The market is punishing the stock not because of bad performance — but because of perceived acquisition risk, dilution, and the size of the bet they’re placing on Foot Locker’s turnaround.
Here’s the key takeaway:
📉 The chart is clearly bearish right now, and this isn’t the time to play hero.
But support around $166 is a critical watch level. If the stock stabilizes there and starts building a base again — especially with improving volume and momentum — then there could be a setup for both traders and long-term investors.
Until then, keep this on your radar, but don’t force an entry just because it “looks cheap.” Price is truth, and right now it’s saying: wait and see.
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*Disclaimer: The examples in The Options Oracle are my opinion, not financial advice.