Nike - A Potential Shorting Opportunity?
Markets getting tired
Analyzing the S&P 500
Starting with the SPY 0.00%↑. We've seen a particularly significant bounce off the 420 estimated point, a key area we've been keenly observing and discussing for quite some time.
Looking at the anchored volume weighted average price (VWAP), the value of transactions has been on an upward swing. What pops out as an even more fascinating development is the confluence of three separate indicators at the same point: the aforementioned VWAP, the rising 200-day moving average, and a breakout point.
This potent combination suggests that the market made a couple of good days' move off the above-mentioned factors. However, what catches the eye currently is that we are nearing this prior resistance point. When we take a closer look, it appears that the market just barely touched that point and pulled off a bit till the closing.
From here, exploring potential scenarios is the name of the game. Keeping a close eye on the shifts in the market as it moves, we might witness a rest day, or perhaps, a small pullback before another rally ensues. In such a situation, exploring some shorts to add to the portfolio could prove to be a smart move.
Nike - A Potential Shorting Opportunity?
Switching our focus from the broader market to a specific entity, let's delve into our idea for the day - Nike (NKE).
Plotting the anchored VWAP from the previous high of Nike indicates an intriguing overview. The representation seems to come straight overhead and delineate a spectacular tightening pattern.
"Charting patterns are an integral part of technical analysis — they're the visual representations of collective human behavior. They're a testament to the fact that human actions and emotions (in this case, buying and selling decisions) tend to repeat themselves." - John Murphy, author of 'Technical Analysis of the Financial Markets'
With the broader market possibly poised for a pause, a breakdown in Nike could present a tantalizing opportunity for shorting. It's definitely one development we're going to watch closely.
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