Why Penn National's Stock May Be A Gamble As It Heads Toward Support

Penn National Gaming Inc. PENN shares are trading higher Thursday after the company announced a proposed private offering and updated its second-quarter revenue.

Penn National expects revenue to be in the range of $1.45 to $1.55 billion, exceeding the estimate of $1.35 billion.

Penn National was up 2% to $78.29 at last check. Below is a technical look at the stock's chart.

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Penn National Daily Chart Analysis

• Shares recently cracked below the higher low trendline and are now testing a previously key support level.
• The stock is trading below both the 50-day moving average (green), and the 200-day moving average (blue), indicating sentiment in the stock has been bearish.
• Each of these moving averages may hold as an area of support.

Key Penn National Levels To Watch

• The stock crossed below the higher trendline and could be ready to see a bounce at a key area near $75.
• The $75 level is an area on the chart where the stock once found resistance, but broke above and now may hold as support. The stock is currently testing to see if this level holds as support.
• The Relative Strength Index (RSI) has been falling and sits below 50, meaning that the stock has more sellers in it than buyers. The RSI took a large dip recently and almost reached the oversold area where there are many more sellers than buyers.

What’s Next For Penn National?

Bullish technical traders would like to see the stock bounce at the $75 level and start heading back up. The stock getting back above the higher low trendline is the most ideal move bulls could get. Bulls also would like to see the RSI cross above 50.

Bearish technical traders would like to see the stock fail to hold the $75 level as support. If the stock can consolidate for a time below the $75 level, it may see a large downward push.

Photo credit: Baishampayan Ghose, Flickr