Here is your Bonus Idea with links to the full Top Ten:
Nike (NYSE:NKE), $NKE, had a tremendous run higher from the 2009 low to a top at the end of 2015. It pulled back from there and then held in a $10 range for 18 months before pushing higher in November. The price rose along rising trend support and topped out at the same place it stopped in December 2015. Last week saw it pullback, retracing nearly 38.2% of the leg higher, before a rapid reversal higher, but still under the prior trend support, now acting as resistance.
Momentum is rolling over with the RSI turning down in the bullish zone and the MACD also turning lower. There is also large separation from the SMA’s. Resistance sits at 68.20 above. Support lower comes at 65 and 62.50 followed by 59.90 and 58. That would be almost a 61.8% retracement. Short interest is low at 2.2%. The company is expected to report earnings next on March 19th. Continuation lower looks like a solid short opportunity. Reversal to a new high sets up a target to 86 on a Cup and handle pattern.
The February options chain shows the largest open interest above at the 67.5 Strike. So this week may have a bias to the upside. The March options chain shows a range from 62.5 to 70 on the Put side with a range from 65 to 70 on the Call side. The March 23 Expiry options, the first past the next earnings report, are just building but the April options show solid open interest centered on the 47.50 to 50 range on the Put side. On the Call side it is spread from 52.50 to 75.
Nike, Ticker: $NKE
Trade Idea 1: Buy the stock on a move over 67 with a stop at 65.
Trade Idea 2: Buy the February 65.50/67.50 Call Spread (97 cents).
Trade Idea 3: Sell the stock short on a move under 64.50 with a stop at 67.
Trade Idea 4: Buy the March 65 Puts ($2.25) on a move under 65, and sell the February 62.5 Puts (39 cents) to lower the cost.
After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into February Options Expiration saw the equity markets finally have their first 3%, 5% and 10% pullbacks in a very long time, all in one week.
Elsewhere look for Gold to continue lower while Crude Oil also continues to pullback. The US Dollar Index bounce looks to continue while US Treasuries are biased continue lower. The Shanghai Composite and Emerging Markets are both biased to the downside, but with Emerging Markets at long term support.
Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s SPDR S&P 500 (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). Their charts incurred major damage in the shorter time frame but all ending with potential reversal candles, awaiting confirmation Monday. The longer timeframes all see major rests to momentum indications and stopped short of any trend change. Use this information as you prepare for the coming week and trad’em well.
DISCLAIMER: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.