Pigskin Classic, Part 2
Geoffrey A. Smith, DTI’s Chief Instructor
Back in September I wrote about Nike (NKE) and Under Armour (UA), and the effects of football season on their stock prices. (Click here for that article.). At the time, UA was trading at 71.00 and NKE at 80.00. Since that time, NKE has gone up to 92.54 and UA has declined to 60.00 and now trades at 64.27. Talk about being a wash. One went up $12 and the other declined $11. The decline in UA is surprising since its earnings on 10/23/14 came in well above expectations with revenue jumping up 30%. Despite the good report the stock declined.
Notice the two charts below which utilize DTI’s RoadMap™ market analytical software. These are daily charts with 3-day (red), 21-day (blue), and 65-day (orange) simple moving averages. Shortly after the first article, UA’s 3-day average broke below the 21-day average. With a 3 consecutive day close below the 21-day average, and the 3-day average being below the 21-day average, this was a warning sign to exit a UA long position. When both the 3-day average and 21-day average broke the 65-day average, this was a “no holds barred” sign to bail on the stock.
NKE on the other hand, has been trending nicely, with the 3-day average bouncing off the 21-day average. At this point, as long as NKE stays above the 65-day average, stay long. If it breaks the 21-day average, this could be an early sign that the trend is over.
Based off the news and earnings reports, both should be higher. However, this is the market and no one has a crystal ball. We’ll see how the season ends.
Good luck trading!