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After last Friday’s rally, we are recommending a bullish trade on Nike (NYSE:NKE).

As of 12:01 a.m. Friday morning, tariffs on $200 billion of Chinese goods jumped from 10% to 25%…and the world didn’t end.

Even though traders pushed the S&P 500 down to its lowest level since March 29 in early trading, Wall Street rallied. Now it appears to be signaling it still has confidence in the U.S. economy and the U.S. stock market.

Friday’s rally solidified support levels for many of the bullish trades we have in our portfolio, and it gives us an excellent opportunity to enter a new bullish trade on one of our favorite stocks in 2019: NKE.

NKE has been a strong player in a strong industry group this year, and we expect the stock to only get stronger from here. Let’s take a look at a few of the great things NKE has going for it.

Tariffs Have a Limited Effect on NKE

From a trade and tariff perspective, NKE is in a sweet spot because it only manufacturers about a quarter of its products in China. The company produces two thirds of its shoes and apparel in Vietnam and Indonesia, two countries that are not subject to the new 25% tariff.

Plus, even though China and the United States are still embroiled in trade war disputes, NKE products continue to sell well in China.

And NKE still has high profile endorsments, which should help its brands stay strong. Tiger Woods, one of NKE’s high profile endorsers, returned to the top of the golf world with his recent win at the Masters.

And basketball phenom Giannis Antetokounmpo — the star of the Milwaukee Bucks — is about to launch his new shoe, the Greek Freak 1. Demand for Tiger Woods’ gear and the “Greek Freak’s” shoes are bound to boost sales worldwide.

Retesting a New 52-Week High

From a technical perspective, NKE is bouncing up off a strong up-trending support level. It has plenty of room to run to the upside, and the stock recently set a new 52-week high of $90 on April 18. We wouldn’t be surprised to see the stock rally back up to this level during the next month or two.

Daily Chart of Nike (NKE) — Chart Source: TradingView

We aren’t going out very far with the expiration date on this trade. The weekly options that expire in May have a lot of open interest and strong premiums, which should give us a great short-term profit.

We also expect to enter another trade on NKE when this one expires, and we think we’ll be able to do that at a higher strike price if the stock continues to rebound.

To find out which puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today. 

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.

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