Tiger Woods just won the Memorial Tournament, tied Jack Nicklaus’ for second on the tour victories list and looks solidly on the comeback trail. Will the “swoosh” follow?
Nike (NYSE:NKE), together with its subsidiaries, engages in the design, development, marketing, and sale of footwear, apparel, equipment and accessory products for men, women and children worldwide. It offers products under the trademarks of Cole Haan, Converse, Chuck Taylor, All Star, One Star, Star Chevron, Jack Purcell, Hurley, and Umbro. The company sells its products through retail accounts, its own retail stores and Internet sales, independent distributors and licensees.
After making a new high around 115 in early May, Nike shares have sold off sharply. Recently, though, NKE has found solid support at the $104.50 level, twice bouncing off it. Sentiment, which had become overly bearish, finally turned and is curling higher. Implied volatilities spiked as well — usually another good barometer of a short-term capitulation low.
NKE still is well above its 200-day moving average, while still trading below the 50-day MA. From a candlestick perspective, the “doji” on June 4 provides further evidence of support.
Now that Tiger Woods is back, I look for NKE to head higher, fill the gap on the chart and approach the 50-day moving average around 110 by July expiration.
Based on NKE’s closing market price of $107.07 for June 6, 2012, and using a target price of $110, and a target date of July 20, 2012, option strategies to consider include selling a July iron condor, buying a July put condor, buying a July call spread or using another options strategy that best fits your trading style and risk-return objectives.
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As of this writing, Tim Biggam did not hold a position in any of the aforementioned securities.