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CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs and spread bets with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Asset Watch
Tuesday October 4 2022, 14:45pm GMT
Source: TradingView
When analysing the Nike/SPDR S&P 500 ETF (SPY) ratio, Nike has underperformed in the S&P 500 for eight of the last 10 months. However, an identical underperformance occurred in 2016, and the streak stretched to nine of 10 months in 1997 (the vertical rectangles).
Yet, in 1997, Nike outperformed the S&P 500 by nearly 7% over the following six months. After the 2016 drawdown, Nike outperformed the S&P 500 by more than 7% over the following seven months. With history on the retailer’s side and S&P 500 seasonality poised to turn bullish in early/mid-October, Nike could offer a solid-risk reward proposition once sentiment shifts.
The Nike/SPY ratio’s monthly RSI is the most oversold since 2000. Therefore, it’s been more than 20 years since Nike has lagged behind the S&P 500 to this extent. Furthermore, since Nike is the global leader in sportswear with a 15% market share, will long-term traders be rewarded for their patience?
Sources:
Nike earnings:
https://www.cnbc.com/2022/09/29/nike-nke-earnings-q1-2023.html
Nike global sportswear market share:
S&P 500 seasonality
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CFDs and Spreadbets are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of Retail investor accounts lose money when trading CFDs and Spread Bets with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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