Geoffrey A. Smith, DTI’s Chief Instructor
Football season is here once again. College football started over Labor Day weekend and professional football starts a week later. With the onslaught of all the fans comes the game apparel and various knick knacks that accompany them to the games or the living room. So how do traders take advantage of a seasonal event like football? One way is to look at who sells the game apparel, like Nike and Under Armour. These are the symbols you see on jerseys, hats, and shoes throughout the fall season.
Looking at these stocks on a seasonal basis, we find that each has a tendency to move higher in the early fall. Look at the two seasonal tables below. Notice that Under Armour starts heading higher in August, while Nike starts its move in September. Both move higher for about three months with Nike picking up about 8% and Under Armour picking up about 4.75%.
Both are in a steady uptrend after the World Cup and should continue their trend for the next couple of months, barring any unforeseen global events or poor earnings announcements.
Utilizing DTI’s RoadMap™ market analysis software, below are two daily charts of Nike (top) and Under Armour (bottom) showing 3-day (red line), 21-day (blue line), and 65-day (yellow line) simple moving averages. Notice both are above the 21-day and 65-day averages and trading at or above their highs. You can either look to buy the stock, or maybe buy the November 80 call in Nike or the November 70 call in Under Armour with expectation for both pushing higher. These are in the money calls that should hold their value fairly well. If they close below their 65-day averages, look to exit to minimize loss.
Good luck trading!