There’s no need to sweat the next impromptu tweet or even those sanctioned trade talks playing with market bulls and bears these days. Instead, stand ready to play athletics retail stocks Nike (NYSE:NKE), Under Armour (NYSE:UAA) and Lululemon (NASDAQ:LULU), as the price charts in NKE, UAA and LULU stock signal that it’s game time for bulls.
The G-20 Summit has come and gone. And after a brief bit of cheer from Wall Street following this weekend’s negotiated tariff truce between the U.S. and China, it’s back to business as usual and more tempered worries by investors that a long road ahead remains intact.
Having said that, let’s take a look at athletics retail stocks NKE, UAA and LULU and see what’s happening on and off the price charts.
Nike has had a couple missteps of late. Last week, the company delivered underwhelming fourth-quarter results featuring its first profit miss since 2012. Earnings also declined for the first time in nearly two years.
Now Nike has been forced to pull the launch of its Betsy Ross themed Air Max 1 Quick Strike shoe. The move by the athletics retail giant comes after activist and sidelined NFL quarterback Colin Kaepernick took issue with the design due to the sneaker’s historical flag that’s inexorably associated with slavery.
On the price chart NKE stock is seeing some challenges as well. Following a very constructive-looking corrective test, which finished in early 2019, shares have struggled with their prior high. Two new all-time-highs formed this year have each met with selling pressure.
I’m optimistic though. Nike stock will move higher. Given the size of Nike’s 2016 – 2018 base, non-extended gains of around 30% since breaking out and its intact uptrend, it’s nearly time to just do it and buy the stock.
The Trade in NKE Stock
What I’d recommend for NKE stock is to enter shares if a fresh high this week above $86.20 is confirmed. This entry smartly waits to see if Monday’s fireworks from investors are more than a one-day show, while also allowing shares to comfortably reclaim the former highs and move through resistance.
Under Armour (UAA)
The second of our athletics retail giants is Under Armour. As with NKE stock, I’m a buyer of UAA, but for very different reasons. Under Armour is a turnaround story that continues to make the right moves. Off the price chart, this retail stock’s successful rebuilding of its business was on full display with its early May earnings report.
Technically, the big picture on the Under Armour price chart looks equally promising. After establishing fresh relative highs in mid-June, shares of UAA have pulled back for the last three weeks to test its prior trend highs from May 2018 and last December.
The Trade in UAA Stock
The recommended strategy in UAA stock is to wait for a confirmation of a weekly pattern low before purchasing this athletics retail giant. If shares remain in this vicinity, the trigger might look like a hammer or doji candlestick as the high of the weekly candle is broken.
To play it safe, I’d advise a stop-loss below $24.35 and look to book profits down the road in-between $30 – $31.50.
The last of our athletics retail giants is really more of a force within the athleisure and yoga arena. As such, some investors might squabble about whether LULU stock should be grouped with NKE or UAA. I get it. More importantly, it would be hard to argue that shares of Lululemon aren’t showing heat off and on the price chart.
They definitely are!
Regarding the former, LULU’s mid-June earnings report topped the Street’s profit and sales views, delivered solid year-over-year growth and also offered investors upwardly revised guidance. And on the price chart, LULU stock has also been very hot with Wall Street.
The Trade in LULU Stock
With LULU stock I’d suggest putting shares on the radar for purchase above $185. Currently, Lululemon is testing its late April flat or cup-shaped base high of $179.50 for support after a successful earnings-driven breakout.
By forfeiting a couple percent, this entry lets last week’s hammer be confirmed, while reducing the importance of the prior candle’s bearish hangman pattern. I like the sound of that. And as a momentum name, this approach should have little trouble pleasing investors that show a bit of patience versus buying today’s less fully developed bottom.
Disclosure: Investment accounts under Christopher Tyler’s management currently own positions in in UAA stock and its derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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