Peloton’s (PTON) stock soared over 38% on Thursday after the company posted positive free cash flow for the second quarter in a row—a first since 2021. Is the turnaround working? Maybe. But investors aren’t waiting around—they’re hopping on.
Peloton came to my attention while reviewing the Market Movers panel on the StockCharts dashboard on Thursday. Simply put, it’s an easy way to find extraordinary market moves.
We all remember Peloton’s pandemic glory days. But as the world reopened, Peloton’s stock took a nosedive—and the weekly chart below tells the story.
CHART 1. WEEKLY CHART OF PELOTON STOCK. The picture of this massive 97% plunge tells the entire story.
Under new leadership, Peloton crafted a turnaround strategy in 2022. Now, the results are finally rolling in, and the latest earnings hint that the company could be pedaling back into profitability.
Zoom in to a daily chart covering the last nine months, and you’ll see Thursday’s dramatic spike much more clearly. But you’ll also see that Peloton has several technical headwinds on the way up.
CHART 2. DAILY CHART OF PELOTON. Caution: there’s a lot of resistance above.
Still, if Peloton gets its house in order, this price spike may be the earliest technical entry point for what could be a potential “multi-x” return. Assuming this is the case, what are the levels to watch?
In addition to the daily chart seen above, let’s examine a few important levels from a tactical perspective.
CHART 3. DAILY CHART OF PELOTON WITH ADDED INDICATORS. Notice the rectangle formation, which should provide context in terms of support and resistance.
First, notice the spike in the StockChartsTechnicalRank (SCTR), from a low 20 to nearly touching the 90 line, which signals bullishness across multiple indicators and timeframes.
Next, look below the chart at the Chaikin Money Flow (CMF). That, too, jumped to a level higher than the previous nine months, indicating a surge in buying pressure.
Now, look at the price action itself. You can still see the resistance levels above, the first of which ($4.80) price is about to be challenged. Check out the rectangle formation (highlighted in orange). If you’re holding shares, you’re hoping the price doesn’t drop back into the middle—ideally, it’ll bounce off support at the top.
If the price dips, there’s another entry point at the bottom of the formation. With Peloton at its lowest amid a turnaround, a bounce is likely—unless Peloton fumbles the ball, so to speak.
If the price closes below the rectangle, more downside could be in play. How much further down before penny stock territory? It’s anyone’s guess. But now, the rectangle formation may serve as yet another cloud of “technical” resistance following a “fundamental” fail.
At the Close
Peloton is riding that fine line between potential turnaround and pitfall. With some evidence of early success, investors are betting on a multi-x recovery. But technical headwinds loom large ahead of its current breakout. Whether Peloton breaks out or dips back down hinges on its ability to execute its turnaround strategy. Stay sharp—this could be a make-or-break moment and a ground-level market opportunity.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your personal and financial situation, or without consulting a financial professional.