Traders appear to have already taken off for the longer holiday weekend as volume on a number of sectors has dropped significantly. Despite that, we’re seeing some strength in athletic stocks lately that has been capped by today’s earnings news from Nike Inc. (NYSE:NKE).
Nike Inc (NKE)
Nike released earnings this morning that were better than expected by The Street. The news was tempered by some lowered guidance, but there was another positive in the report regarding a new collaboration with Amazon.com, Inc. (NASDAQ:AMZN). The news has NKE shares surging higher, breaking into a bullish pattern.
- This morning’s 5%-plus jump takes out the most recent highs for Nike stock that were made in earlier June when it ran into resistance at $55. This breaks a pattern of lower highs and lows for the stock, which will attract more technical buyers.
- NKE shares have broken well above their top Bollinger Band on today’s move. This suggests that we will see the stock rally in a fast and aggressive move while the market piles into this new technical trend.
- The move in Nike stock also breaks the stock into a long-term bull market trend as this month will see the stock close above its 20-month moving average for the first time since May 2016. This will put NKE shares on long-term investor’s radar screen as a bull.
Under Armour Inc (UAA)
Under Armor shares have spent almost the entire year trying to recover from their February earnings dive.
After building what looks to be a long-term bottom, UAA stock is now improving its technical outlook and it is worthy of consideration for a longer-term technical play.
- Just last week, Under Armor stock completed its first successful test of its 50-day moving average since July 2016. This indicates that the technical traders are now stepping in to support the trend.
- The 50-day moving average for UAA shares is now transitioned completely into a bullish trend. This suggests that the price target, from a technical perspective, has been raised. Our models are suggesting $23 as the next short-term tradable target.
- The current short interest ratio for Under Armor stands at 6.3, which suggests that the stock could benefit from a short covering rally that would target the same $23 price target.
Lululemon Athletica Inc. (LULU)
Like UAA, Lululemon Athletica’s year has been rough as the stock has been fighting to get back into a bullish trend that would attract more buyers.
After consolidating at $52 and building a base, LULU stock appears to finally be on its way to higher prices.
- Since the beginning of April, Lululemon Athletica stock has put in a trend of higher highs and higher lows on four different occasions. This is indicative of a increasingly strong bullish trend in the stock.
- The 50-day moving average for LULU stock just finished a transition into a bullish trend as the trendline now has a positive slope. Our technical models indicate that the stock now has a 2:1 probability of positing higher prices each day due to this trend.
- Shares are a bit overbought as the stock is now hitting its 200-day moving average, which may exercise some resistance on Lululemon Athletica shares. Our analysis indicates that we are likely to see the stock pull back to $56 as profit-takers may step in to lower the price. This would be a buying opportunity for chart watchers though as the target for LULU shares is currently $65.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
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