By Nigam Arora & Dr. Natasha Arora
Signal Limited is a Signal(s) with a great record in similar situations but does not meet all of the stringent criteria for a Signal. Typically Signal Limited has higher risk-reward compared to a Signal over the short term.
NKE Stock Cut By One Half
NKE has fallen from $179.10 to $83.12 at the close on Friday. NKE is not a speculative stock but a blue chip stock.
Bloated Inventories
The latest drop came because the margins are lower and inventories are bloated. The size of the inventory bloat is such that it will take time to clear it up.
Momo Gurus
Over the weekend, we are seeing reports from momo gurus to buy the stock, and they could conceivably run it up.
Technical Gurus
Gurus who follow traditional technical analysis are also giving buy signals on NKE at this time. There are several aspects of traditional technical analysis that work well, but then there are other aspects that lead to losses. At The Arora Report, in our system, we use only those aspects of traditional technical analysis that work well. We help you not fall into the trap of those aspects that lead to losses.
The biggest technical buy indicator right now is that the volume on Friday was 48.2M shares. Average volume is 7.3M shares. In traditional technical analysis, such increase in volume indicates capitulation. A capitulation is a buying opportunity.
However, under market conditions such as those that are being experienced now, capitulation is not as simple as just looking at the volume. Please listen to the podcast titled “The Ten Secrets Of Epic Capitulation Riches.”
Investors need to do a 360 degree analysis and not use only one way of analyzing stocks. In the case of NKE, the inventory overhang is so massive that the probability of it trumping the volume signal is high.
Buy Zone
Based on Arora Report algorithms and analysis, for investors following the Best Way, the buy zone is 🔒 (To see the locked content, please take a 30 day free trial).
For those following the Good Way, the Buy Now rating is 🔒.
New subscribers, to understand the difference between the Good Way and the Best Way, please see your Getting A Running Start Guide.
Target Zone
The target zone is 🔒.
Recommended Position Size
The maximum recommended quantity is 🔒 of the full core position size. To learn about the full core position size, please see the Trade Management Guidelines. The Trade Management Guidelines encapsulate in an actionable format technique used by billionaires and hedge funds. Depending on your portfolio size, strictly following the trade management guidelines can make a difference of millions of dollars you can generate over your lifetime.
Stop Zone
Consider a mental stop zone of 🔒.
The Plan
The tentative plan is to buy more if the stock dips further in October. It is conceivable that the position will be exited if the stock runs up going into Christmas. If not, it is a medium term tactical trade.
Caution
Investors should wait patiently. If the stock falls further into the buy zone, then it will be a buying opportunity for a tactical position. If the stock does not fall into the buy zone, the best way to think is that there are plenty of other opportunities.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
