3 Stocks I Saw on TV: NKE, KBH, GILD (March 23, 2016)
NKE KBH GILD
Every night we watch the same shows, Fast Money and Mad Money. We also watch CNBC all day long too, right? Well we want to use the ideas that we get on those shows. We want to use those ideas for us to make some money. I don’t just want to see these guys talking about stocks and then I reflexively push the buy button, that’s a great way to be losing money. But that’s not our point here. I want to talk to you about these 3 stocks I saw on TV. Lets see if we can figure some stuff out.
First of all Nike ( NYSE:NKE ). I covered this is yesterday’s 3 Stocks I Saw on TV, and mentioned that if stock gapped down, which it was certainly going to, not exactly a prescient observation on my part. But if the stock gapped down it just really needed to stay above the 60.00 line, it needed to stay above the 200-day moving average and it was a BUYING opportunity. Not for a trade, but for a position in a stock that is likely to move much higher. So what happens? The stock gaps down in the morning, it was actually lower pre-market, the stock gapped down in the morning and first thing started to move up. What it’s done after here, I don’t care, it’s not the point of this video.
The point is, that when a stock gaps down like this you look at the daily chart to get a real assessment of where support really is for this thing. And after this kind of pullback, these two little blue lines here were right down around here so you could look at this and say, “Alright, it looks to me like the stock’s going to open up right about here. Now where is my danger zone here?” My danger zone is that the stock falls below 61.00, below 60.59, 60.58, and then like THIS is the next zone of support here. That’s really your danger zone on buying this stock. But you can avoid that whole mess by just going intraday, even doing a 1-minute chart, because we’re doing surgical precision here. We just want to buy the stock, but we want to buy it at the right price. So within just a minute or two you know, after all this volume, that this is the low of the stock. Now, what it does tomorrow or the next day or next week, that’s also not the point of this video.
The point is, you decide you’re going to buy a stock, it’s gapping down, you look a levels of support then you can take your shot and you know what you’re risk is. You don’t even have to risk those two or three dollars to the downside. Instead, you risk just missing this little 40 or 50 cent price move before you get in on this stock. So that’s really how you trade Nike ( NYSE:NKE ). As far as getting into the position. Longer-term, I think it’s probably going to drift around sideways for a while because that’s what it does from time to time. But it’s still Nike ( NYSE:NKE ) and ultimately I think this stock is going to reward you. But it’s only going to reward you if you have a long-term bent on the stock, if you’re looking at it long-term. If you’re looking at it short-term you’re going to see the stock get up to 64.00 maybe 65.00, and it’s going to come back down, you’re going to get stopped out, you’re going to buy it again, lather, rinse, repeat. It’s going to drive you nuts. So if you’re long Nike ( NYSE:NKE ) be involved for the long-term. Otherwise, just go get a pair of shoes, hopefully, Air Jordans.
Okay, KB Home ( NYSE:KBH ), home builders; heck of a tare, sideways consolidation. The 200-day moving average looks like a rollover to me. Look at this pullback here today, on volume, nasty move down, almost 4 percent. Then comes earnings, they report after the bell, they beat on bottom line earnings and on top line revenues. That’s kind of a big thing for home builders, because even though we’re getting nothing but good news out of Washington, and “Oh my gosh, the economy is so HOT! We’re NOT in a recession, seriously, we’re not.” That really hasn’t been the reality. But now, when we’ve got a home builder that beats on REVENUE estimates and EARNINGS, now suddenly we have to wonder, maybe there is going to be some juice here. So here’s what I want you to do on KB Home ( NYSE:KBH ): Respect the downtrend. It’s been trending down for a while. Respect your levels. If you’re buying this stock tomorrow morning I think you’re probably making a mistake.
Lets say it opens at $14.00. I would rather buy it at 14.25 than $14.00. Because we could very easily see this stock, particularly with the S&P and the Dow looking like they might be rolling over a little bit, we could see this stock gap up to $14.00 and then rollover. So you’re buying this gap, okay? It turns out to be a pretty hefty gap, almost a 7 percent gap from today’s low to tomorrow’s open, assuming it opens at 14.00 or so. So you’re buying a stock that gapped up 7 percent in a market that looks like it’s rolling over. That’s not going to work out too well for you. So what I would suggest doing is, wait. You can wait a few days to see what this stock does. But at the end of whatever day it is that you’re buying this stock, you want to have your stop, I would say right there. Keep a really tight stop on this stock and wait for it to give you the heads-up that the stock is going to gap up and stay above that gap.
The last stock is Gilead ( NASDAQ:GILD ). This is one that Cramer was talking about on Mad Money. The deal with this was that they lost a patent suit, and I think there a still issues pending but whatever. I think that’s the case in Gawker and Hulk Hogan too, still issues pending before the court. But the stock popped out of a squeeze and it came down, not on technical action but a fundamental story, where Merck ( NYSE:MRK ) won a patent dispute with Gilead ( NASDAQ:GILD ) on their Hepatitis C CURE. Not just a treatment but actually it cures Hepatitis C. And so that’s going to cost Gilead ( NASDAQ:GILD ) a lot of money. Cramer was saying that maybe that’s why the stock is down to a certain extent. But he really feels that it’s more about a pricing power thing. Especially with what’s happening in Washington. And then now there’s competition, that Gilead ( NASDAQ:GILD ) is down on a pricing power issue. I get that, although I will say it’s so reflexive that I just think it’s the patent thing. I think that the pricing power will KEEP Gilead ( NASDAQ:GILD ) down. That is something that is actually, in my view, started to be reflecting in the stock for quite a while.
So what I would suggest you do with Gilead ( NASDAQ:GILD ), I wouldn’t buy this stock. And by the way I held it yesterday, this thing totally caught me by surprise, I had to sell for a loss today. I wasn’t a bit happy about it. But I’m happy when I look at the stock at $90.00, because I sold at a higher price. So the point is, don’t be buying Gilead ( NASDAQ:GILD ) right now. You are not in danger of missing a big massive move to 100.00. There’s no positive catalyst right now. Maybe later, maybe the court comes back and says, “Well, we’ve come to our senses and we were wrong.” Doubtful. So stay away from Gilead ( NASDAQ:GILD ). Let this thing base out for a while, but probably just look the other way. I think this stock is DONE for a while.
3 Stocks I Saw on TV Free Chart