S&P 500 Market Outlook: Neutral
Bearish Trade: NKE $79.23 – Consumer Discretionary
OptionsPlay’s bearish trade for Wednesday, April 2nd is Nike (NKE). NKE is part of the Consumer Discretionary Sector (XLY). XLY has declined 19.85% lower over the past month and its 1m and 6m trend turned bearish on Feb 25th and is just bounced lower off its $102 resistance level. With general credit card spend down 31% and clothing down over 50%, we expect this sector to see further weakness in the weeks and months ahead.
Nike’s 1m and 6m trend turned bearish yesterday and recently bounced lower off its $85 resistance level. With a technical score of 8 (out of 10), NKE is a strong stock that is starting to turn lower.
As a stop loss, if NKE were to trade above $85 for multiple days, this would invalidate our analysis and suggest cutting losses on the trade. We also recommend cutting losses on this options trade if the value of the vertical spread declines below $2.25.