NBA Uses Pitchforks to Kill the Stock of Sponsors

• Posted by Greg Harmon
• on December 15th, 2011

or Jerseys, Shoes, Basketball and Pitchforks

The NBA lockout had a major impact on the stock price of their sponsors. Since announcing the end of that lockout on November 26 the stock of its three major apparel sponsors Foot Locker, $FL, Nike, $NKE and Adidas AG, $ADS.DE benefited from big run ups. But all have now started to fade. Is this a sign that they missed the the window of opportunity to sell NBA related jerseys and shoes? Or just a sign that the NBA has become irrelevant to these companies? I can not answer that question but for to express my own un-researched opinion. Since an NBA game is either over after the first 15 minutes or the first 46 minutes are irrelevant to the outcome, perhaps these stocks will come back at the end of the season. Time will tell, but in the meantime the charts give some insight to the future. Let’s take a look using the Andrew’s Pitchfork.

Foot Locker, $FL

Foot Locker, $FL, rejected off of the Median Line (ML) of the bullish (green) Pitchfork, creating the pivot for the bearish (red) Pitchfork and has been heading lower. It still is close enough to be attracted back until it moves below the middle of the channel using the Lower Median Line (LML) approximately at the Simple Moving Averages (SMA) so remains bullish. It has a Relative Strength Index (RSI) that is falling but holding bullish while the Moving Average Convergence Divergence (MACD) indicator has crossed bearishly negative. These suggest more downside. A move below the SMA’s will likely attract to the LML.

Nike, $NKE

Nike, $NKE, also rejected off of the ML of the bullish Pitchfork, but is already near the middle of that channel with the LML below as it touches the 50 day SMA. The RSI is cracking the mid line but still bullish while the MACD is crossed negative. Both support more downside, and if through the 50 day SMA look for it to attract to the LML near 90.

Adidas AG, $ADS.DE

Adidas AG, $ADS.DE, never made it to the ML of the bullish Pitchfork before falling back to the LML. It now looks to that LML as support as the bearish Pitchfork takes hold. The RSI has dipped into bearish territory as well and the MACD is growing more negative. In fact it is getting close to the middle of the downward channel between the Upper Median Line (UML) and the ML of the bearish Pitchfork where the battle to attract it much lower can be waged. Watch for a break below 47, losing contact with the bullish LML to play a role as a catalyst for a move lower and back over the UML of the bearish Pitchfork for a move back towards the bullish ML. This can be traded in the US via ticker $ADDYY.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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