Can Nike continue its move higher and sustain it?
Nike is a company that has solid fundamentals, however recent figures have not been exactly stellar. With the stock rising more than 1.7% how can it sustain its recent rally and when will it stumble?
Leading sports footwear and apparel company Nike has been one of the best performing stocks in February. The company’s share prices have risen by more than 10% after a broad correction in the stock market ensued in the end of January. The main categories in which the company offers its products are basketball, running, football, sportswear and training.
With recent growth numbers failing to impress us much we don’t believe that there is unlimited upside here, however with the share price rebounding so briskly we can decipher a trend and for now that seems to be up.
So what would we be doing in the case of this particular company? Well the answer is rather simple – buy calls if the price drops sufficiently to warrant our risk. For now we would need to see a correction to about $77 to purchase daily calls. If that level is broken by half a dollar a reversal is more likely and we would then switch to buy puts below 76.75.
Do we expect to hit these levels tomorrow – well who knows, but as long as we are seeing substantial volatility in this stock everything is possible. Our main scenario will differ if the price continues to go higher without correcting – in that case we shall embark on buying daily puts once we reach $79.
However we would be careful if prices break above $79 and continue moving higher towards December’s highs just above the $80 mark. That would mean that the upside can open once more and we will see further gains towards $82 for starters.
Recent concerns regarding emerging market growth rates and sustainability of their demand levels are raising eyebrows, but who knows when the big correction will come.