We have done well again with this one, but I have to let it go after January’s quick Biotech run-up. We are currently overbought on the RSI, at a resistance around 76, and have very little pressure in terms of cash flow coming in. I believe we could put its capital to good use elsewhere for the next month or so. If you bought AMGN when I suggested at 68.4, you would have an 11% gain. The stock is at 76.04 after-hours.
So where do we put our profits? We short sell Nike (NKE) of course.
As far as technicals go, Nike looks as though it’s been pulling to break 100 for the simple sake of saying it’s in the triple digits. Yesterday’s 2% loss confirmed that nobody is ready to buy Nike at $100. MACD looks negatively inverted, and a quick look at a 50% Fibonacci retracement says that Nike could fall below 90.
Five months of highs are rare and usually unsustainable for companies with as few growth prospects as Nike. Also, Philip Knight, one of the largest stockholders of Nike, has sold over one million of his four million shares just this month.
This is not a risky bet, worst case scenario is that the stock hits 101, and we quickly sell for a very small loss. Best case scenario, and a more likely one, is a quick 10% gain.
On other fronts, I’m seeing a 6.6% gain after-hours for XWG, so we could sell it out tomorrow depending on how the price action moves in the first hour of trading.
I hope this bodes well.
-Chris
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