3 Stocks I Saw on TV: JNJ, VRX, NKE (March 21, 2016)
JNJ VRX NKE
Every night we watch the same shows, Fast Money and Mad Money, and we want to use those ideas to make some money. Well good trading takes more than just hitting the buy button every morning on the stocks that you saw on TV last night. I’m here to help YOU make some money on 3 stocks I saw on TV.
We’re going to start with Johnson & Johnson ( NYSE:JNJ ) here. Now Cramer was covering this last night on Mad Money. He said, “There are just a lot of stocks that are worth more than their currently trading at.” Johnson & Johnson ( NYSE:JNJ ) is one of them (you know, Band-Aids and all that stuff). So too bad about this thing back on August 24th because that really wrecked this chart. But if we get past that we can see that the stock is peaking right at $108.00 or so. So you have to respect that, you’ve got to respect that level. Now this company doesn’t report earnings until April 19th so earnings aren’t an issue like they are on Nike ( NYSE:NKE ), which we’ll get to in just a second. But I think the weekly chart is pretty instructive. This stock has actually been basing for over a year. It’s up near an all time high.
I would do one of two things, it’s at $107.00 right now, the all time high here was up at 109.50. I would give up a couple bucks and wait for the stock to start trading above this level; simply because the idea isn’t to just own a stock, the idea is to make money on it. In other words, and you only make the money during the holding period so you literally want to be able to sell it for higher than you bought it. But the time that that happens is in between when you buy it and when you ultimately sell it. So the point is, why buy the stock at 107.28 if it’s going to sit here and maybe even lower BEFORE it breaks out? I would rather, again, give up a couple bucks in risk, that’s your risk. Your risk is you’re missing the big move to the upside by $2.00. If this stock starts trading to an all time high, trust me, after this kind of consolidation it will be moving for a while.
Okay, Valeant Pharmaceuticals ( NYSE:VRX ). You know the story behind these guys, the weekly chart tells the tale. Bill Ackman’s Pershing Square, maybe it’s not even going to be there any more, really, really nasty trade here. Here’s the deal: They just booted the CEO, that guy is gone with the wind. Ackman is taking a place on the board, or he’s been nominated. Something tells me he’s probably going to get on there, I could be wrong, but I’m not. And he already has another guy on the board too. So who knows what the long-term prospects of this company are? I’m looking at this, I’ve said it before, I’ll say it again, I’ve got a $20.00 price target on this. Do you know why? Because if it hits $20.00 then I’ll be able to say it hit my price target. What I’m really saying is, I don’t care who’s on the board, if this company has the kind of issues that it’s probably got, it’s really just a valuation thing. And so I’m looking at this as short covering. There’s no way I would want to be long this stock, I just think this is a total short covering rally.
I think your trade is, honestly, that if you are short this stock, I would be covering it here. I sold some puts on this, a bull put spread, because I always want to protect against my downside. I sold the $20.00 puts and bought the $15.00 puts because I think this stock is going to hold up for a while. Longer-term, like I said, I’ve got a $20.00 price target on it for no good reason other than the fact that I wanted to have a $20.00 price target on it. But short-term I think this is going to stabilize, at least for another week or so, until the end of the month. Because that’s when they’ve got to file their 10-K and their 10-Q. And if they don’t they’re going to have I don’t know how many billions of dollars worth of credit or something on their back and it isn’t going to be pretty.
Nike ( NYSE:NKE ), they report earnings after the bell. Dan Nathan was trying to do some chart work on Fast Money. I honestly don’t know exactly what he was saying, but I’ll give you the picture here. This was the all time high on this stock., $68.19, it printed that at probably 9:31 in the morning following the earnings release. So this is really where your ultimate resistance is, right up here at $68.00. If you look at the stock longer-term, and lets just do some trend following here, the trend is up, so you don’t want to fade this stock, you don’t want to go short this stock or anything. But it goes through these fairly prolonged consolidations; this was a particularly nasty one here, it just does it all the time. So you kind of want to be long this stock all the time. Well, if you’re not long the stock now, then you’re trading you’re not investing. And if you’re trading, then go ahead and take some stock right now but get ready to sell it on a pop. I’ll be covering this stock, I’m sure, tomorrow night as well.
But if the stock starts popping above $68.00 just KNOW that that’s an all time high, but you’re probably going to want to sell SOME into it. I can’t tell you right now what to do after earnings are released, because I don’t know what they’re going to be. And I don’t know what the stocks reaction is going to be. So lets talk about the reaction instead. If the stock DOES gap up SELL into that a little bit. Frankly, if the stock gaps down say, “Thank you very much,” and buy some stock. It’s Nike ( NYSE:NKE ) so even if they happen to report a horrible quarter, because I guess LeBron’s stuff isn’t doing that well (I know I didn’t buy any of it, but if you saw my knees you’d know why I’m not buying any of it). So if the stock does trade down on a bad number, buy that stock and then zoom out and then just basically forget about it because this uptrend is in tact. So again, to summarize, if it gaps up and starts trading above 68.00, sell what stock you have, sell some of that into it. But look for ultimately a continuation of the uptrend. And if it gaps down, buy it. Like I said, we’ll cover this tomorrow after they’ve reported earnings; we’ll see what it’s doing after hours.
3 Stocks I Saw on TV Free Chart