Nike (NKE) reported outstanding earnings after the bell and the stock is higher. Here’s your trade. (September 24, 2015)
Here we’re looking at Nike ( NYSE:NKE ), and here’s why: Where’s the price? Oh, it’s up here. The company blew away earnings expectations reporting strong orders over seas, which is good, because there’s a lot of people that live over there and most of them need shoes. The stock’s up about 8 percent. Here’s the deal, if you own this stock I would suggest selling it into strength. Look at this move here, a big pop higher, over 13 percent. Great! If you had bought it there you wold have made money for about 4 or 5 days, then the stock normalized. It pulled back. This is what stocks do.
Here you saw a big gap up, I don’t know what that was in response to, I wouldn’t think it was earnings, but you never know, maybe it was. Over time, over the next week, 2, 3, 4 weeks, the stock drifts down. What makes you think this is going to be any different? For me, nothing. I don’t think anything is going to be different. The stock moves up here. Do you really think, when the stock gaps up here tomorrow, that it’s going to going to keep going? Hey, it might for a day or two, because there are short sellers that are probably freaking out and will need to be covering their shorts. And there will be some “knuckleheads” that say, “Wow! I’ve got to buy Nike ( NYSE:NKE ), it’s at almost $125.00.” Don’t be that guy. Sell into this strength. Take some profits.
I’m serious when I say this, don’t just take partial profits, ditch it, just sell it all. For cryin’ out loud, this is a nice overnight move and if you’re not doing that then here’s what you’re telling yourself (and me too). You’re saying this stock is never going to come into this box, never. It’s never going to come into this area. It’s just going to magically somehow, just always stay up here and then just keep going. Here’s my point. When you get a really, really good move higher on a stock, sell into that. Don’t be buying it, that’s what the professionals are going to be doing. Is it “shortable”? I don’t know, it could turn out to be a pretty good morning trade to be shorting this stock.
The only issue that you’re going to have is the S&P is really at a point where I think the path of least resistance, at least tomorrow (absent of something weird happening), maybe into Monday or Tuesday; the path of least resistance is a little bit of a bounce, a little bit of a recoil rally. I don’t like shorting stocks into market strength. Ultimately, this is a stock that you want to sell into this strength. And maybe we can look at it again next week and see when the market rolls over, and it will, then we can look at shorting something like this.
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