"Please, God, just one more bubble." - Bumper sticker, Silicon Valley, 2003
NEW YORK (TheStreet) -- There was a hefty gap lower for markets and many stocks to start the day; and the weakness continued.
I mentioned Wednesday evening that things looked ready to roll over. I'm not calling for a major correction, but more chop and some weakness is great to let this base continue to build into the fall, which is most often the strongest time of year.
Keeping high cash levels is key, while any positions taken have to be small and have tight stops.
I only have one position left now after being stopped out of Nike (NKE - Get Report) after its failed breakout.
There is nothing wrong with trying breakouts as long as you keep stops in check, at cost or for small losses.
All we've seen is failed breakouts for some time and I've been letting most of them go with a few select exceptions.
There is a time to trade and a time not to trade.
We're pretty oversold here and near support at 192 so we may be able to take a short-term bounce trade soon.
I'd not be surprised to see a move down to 190 in the next week or two as this base continues to build.
Cash remains the place to be as we wait.
I understand it can be hard to do nothing but anyone who's been with me a while knows how quickly we can make a lot of money; and the rest of the time is spent sitting and waiting for the next great time to go heavy in the markets.
Patience is a learned skill.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates NIKE INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate NIKE INC (NKE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NKE's revenue growth has slightly outpaced the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- NKE's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NKE has a quick ratio of 1.71, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, NIKE INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.49% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NKE should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- You can view the full analysis from the report here: NKE Ratings Report