Nike – Sell

Posted on | by Leon Hinde

Nike is expected to report EPS of $0.18, down 70% from the prior quarter. Revenue down 20% to $8bn.

We see Nike as a shorting opportunity coming into the June quarter earnings result.

The above post was made on the 29th May and since then, the US market has pushed higher. With retail likely to fall short of earnings estimates, we remain cautious heading into next month’s earnings.

The below chart shows the updated price action in Nike, and of importance, the close below the momentum indicators.

US Markets

Posted on | by Leon Hinde

For regular readers of our blog and viewers of the Monday night webinars, you would be very familiar with the earnings table below.

The S&P500 index is trading at an assumed $170 of earnings per share for FY21 and $180 of EPS for FY22. We feel these targets are too optimistic and the range could be more like $125 to $150, with a slower rate of recovery into 2022.

The close on Thursday and Friday now has the major US indices trading below our short-term momentum indicators.

Our target for the S&P500 is 2500 support and 3300 resistance.

Global Equity Markets

Posted on | by Leon Hinde

Investors remain overly optimistic that corporate earnings and profits will catch up with elevated asset prices.

Given the massive interventions into markets by the Federal Reserve, the added liquidity has been successful in fostering a lift in equity prices. Unfortunately, there will be little translation into higher wages, full-time employment, or corporate profits.

A broadening of the rally into industrial and financials is continuing to propel the indices higher. However, the prospect of the economy catching up to market expectations in the next 12 months, is very low.

Investors should apply the following “rule” as a form of portfolio protection.

A break below the 10 day moving average will be a sign that market momentum is stalling.