2 Athleisure Stocks That Could Heat Up This Summer

NKE and UAA are both trading near long-term trendlines of support

by Patrick Martin

Published on May 8, 2019 at 12:35 PM

Blue-chip Nike Inc (NYSE:NKE) has struggled on the charts in the past week amid broad-market headwinds brought on by escalating U.S.-China trade tensions. However, this pullback could have bullish implications, if history is any guide.

Specifically, the stock's recent drop has put it within one standard deviation of its long-term 10-month moving average. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been 13 other times in the last 15 years Nike stock has made a similar retreat to this trendline, resulting in an average three-month gain of 6.4%, with 77% of those returns positive. At last check, Nike stock was trading at $83.85, so a move higher of similar magnitude would put it around $89.20, a chip-shot from its April 18 all-time high of $90. 

Monthly Stock Chart NKE

Options look to be an ideal vehicle to bet on more upside for NKE, with the security's Schaeffer's Volatility Index (SVI) of 26% ranking in the 26th percentile of its annual range. This indicates short-term options are pricing in relatively low volatility expectations at that time.

There's another athleisure stock flashing a similar long-term signal. Under Armour Inc (NYSE:UAA) is staring at a month-to-date loss of 4.3%, despite last week's blowout earnings report, but this dip has taken the shares to within one standard deviation of their 52-week moving average.

According to White, the three other times that UAA made similar pullbacks to its 52-week moving average in the last 15 years, it went on to average a three-month gain of 12.35% with all three returns positive. At last check, Under Armour stock was trading at $22.40, so a similar jump would put the equity near $25.16 by this time in August, above its Dec. 3 annual high of $24.96.

Weekly STock Chart UAA

Under Armour stock's pullback has also taken it to a historically bullish short-term trendline: its 80-day moving average. White's data shows that in the four other times this has occurred in the last three years, the security was up 10.6% one month later, on average, with all four returns positive.

Like its sector peer Nike, Under Armour options are attractively priced, following a recent post-earnings volatility crush. Its SVI of 39% ranks in the 11th percentile of its annual range. 

A Schaeffer's exclusive

11 Stocks to Buy Before Leap Day

Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Legendary Stock-Picker Calls Top Stock of 2020
Matt McCall's picks were met with disbelief... Until five soared over 1,000%. Get his latest 2020 pick.
bluebird bio Sinks on Earnings, Application Setback
BLUE has shed 40% over the past 12 months
2 Stocks Down on M&A Buzz
Options traders preferred puts on LC
Legendary Stock-Picker Calls Top Stock of 2020
Matt McCall's picks were met with disbelief... Until five soared over 1,000%. Get his latest 2020 pick.