The Big 3: XLV, ARM, NKE

trading 360. I'm Marley Kayden. It's time for the big three. We've got three stocks, three charts and three trades for you. Rick Duquette will take us through the charts here to take us through the trades today. Don Kaufman the co-founder of Theo Trade. Don great to have you on. Got a nice green day on the screen. We've got yields coming off here as we had the Treasury Department make its announcement of its buyback operation for long term debt. How are you looking at the action we've seen so far this week? Yeah. Everything right now happens to be at least in my camp. It's about the bond market right now. Well, what are we get involved in over here? Looks like a well yield curve. Control by any other name is still yield curve control. So on one side we're going to have the Treasury which is going to be, you know easing off on rates. And on the other side, we're actually going to have the fed doing what? Possibly raising rates, contracting the balance sheet. You have to you have to love this. Look, I think that the days to come to see if the Treasury markets sell back off, that that could be some pending doom for this marketplace. It's a lot of risk on the table. Taking this you know, in stride right now is the market. I mean the S and P s are up some 42 handles right now. Predicated on what I don't necessarily think it's a good thing right now that we are pushing, if you will, rates down in the long end of the curve. All right. And so let's take a look then at your big three here. You've got the Xlvi Health Care Sector ETF is your first pick today. I don't know if you had this as your first pick or not. Before we got these trial results from the Moderna Merck Partnership. But how are you looking at Xlvi right now? Well first of all, absolutely. Like I wanted to take advantage of this pop to the upside. So I was watching the Moderna and Merck kind of news over here. And I was like, oh, that's that's the one I was already eyeballing Xlvi. Listen, Xlvi has been the beneficiary, if you will, of a rotation and a heavy rotation out of SM, out of some of the, you know, big tech and the rotating into into some of the health care over there. It's been kind of a protection trade. Nevertheless, I, I like this from the, the short stance that is I'm going to use this pop to the upside today. And some of the pop is already faded. So it was up closer to 4%. It's actually pulled back in a little bit already, but I'm going to go after it, but I'm going to give myself all the way out to the December 18th expiration. So this is a decent 18. Why am I giving myself so much time. Because I'm looking for a dramatic pullback. And I'm being quite frank in saying like I can't necessarily time this dramatic pullback. So I'm giving myself like months of time. I'm going to buy the 163 puts again, buying the 163 puts selling the 158 puts against it. This one's done for a dollar debit. But anytime you have a dollar at risk on a spread that could be worth five bucks, this trade has only got about a 20% probability inherently in the trade. Nevertheless, though I kind of kind of like my odds over here right now with the capacity for this marketplace to pull back as rotations, I don't think they're going to continue like this. I mean, we just every day we seem to find a way, you know, to, to rotate, but we're still smoking a lot of the, the tech stocks, specifically SM and the semis. All right. And you are right every day in market on close. When I do the sector breakdown, it's just sort of a flip of the day before. I mean, I might as well not look one day and see what happens. If it's if it's right or not, I'll do that and I'll tell you what happens next time. But as we look at the technical setup here, we have obviously a significant pop today off of those trial results. Moderna doubled its value just overnight, although not one of the largest holdings in this group. What are you seeing in the technical setup here and the momentum that we've seen behind health care with this rotation setup? Yes, to be sure. Still a strong day to the upside here. We topped out near 176 60. The prevailing shape before today's move was a rising wedge. We had a trend line going up across these low points here, and another boundary line going across the highs with a more modest slope here to give us this triangular shape with both pointing upward here. Typically this is regarded as more of a bearish type setup. But as you can see it certainly doesn't always hold true. What you'd be looking for would be a breakout beyond either of these two boundary lines. In this case that did happen here. So now our gap is between roughly 170 to 172. An area to watch for potential support would be another gap that lines up roughly with some old highs. Not really perfectly here. 168 and then also here old highs. Subsequent lows near 166. Next we think about our moving averages. In this case here we can see that we have our five day EMA in dark blue coming in near one 7047. That lines up quite closely with our short term white trend line that's been pointing upward here. So now we can also see that lines up with our old blue boundary line here. So we have kind of a triple convergence here of some technical factors. So be on the lookout to see if we do start to pull back. If we start to close that gap, that could be a supportive area to watch RSI. Interesting. A significant development typically is that the RSI has pushed above 70 and moved into the overbought area, marking a new high water mark above its relative peaks that we saw recently. So a reading of 74.8 is a pretty solid move into that overbought area, which is typically regarded as being more of a sign of strength than than of actually being overbought and suggesting a potential pullback here. So now we can see that our volume profile study shows that the nearest accumulation of trading activity that we have on our chart, the most significant one that's nearby 162 to 164. You could also say we start to drop off pretty significantly above 168. All right. And right now as we look at SLV, we are up obviously today more than 3% at 170 509. This next one you've got arm here, arm holding. They are still up 100, 125% year to date. But over the last month, they've really lost some of that momentum that had been on its side throughout the rest of the year. How are you looking at ARM right now, Don? Yeah, loss of momentum is probably a little bit of an understatement. The thing was trading what, 452 sold off into. Well, I mean for the most part got cut in half into the 200 handle and then gets a little bit of a bid back. So arm gets a little bit of a pop after the earnings. I got to tell you now this thing is going right back into the downtrend. That's what it appears to me. And that's exactly the way I'm going to trade it. Like I'm not going to think too hard about this one. Post earnings. I think it's still going to go right back into this this downtrend there is there's no love right now inside of arm. I'm going to go out to the September 18th options expiration. So I don't have to go that that far out to actually think about some some sell side activity hitting this like some of again semiconductors which are also again, seeing some sell side activity. I think ARM is going to follow that exact same path to the downside. So Sep 18 I'm going to go out and buy the 240 puts and sell the 230 puts against it. So this $10 wide put spread that I'm doing is for a 350 debit. And the reason that it's $10 wide spread for a 350 debit normally out of the money spreads would cost a little bit less, but there's actually some implied volatility skew that is not necessarily helping us here. It's actually hurting us a little bit. It's almost like the marketplace has, if you will, some expectations to to the downside in this particular case. Nevertheless, I'm still hopping on board of the that that downtrend looking for arm to to trade well below if you will this this 230 level between now and the September 18th expiration option expiration. All right. So as we look at ARM here is the technical setup showing us that this downtrend could potentially continue over the next month or so. Yes. And it seems like this is an important area that we've reached today. The reason I say that is this area near 240 represents filling a gap that formed a few weeks ago here. So if we were to move lower, that opens the door for a retest of the lows that we saw before that near 218. And then ultimately the post gap down lows that we saw near 194. So it could, you know, be a setup where if we do start to break through some of these technical barriers, we could see continued downside. And indeed as well we've seen the downtrend steepening. We had our blue line here showing a downward trajectory here. But things have intensified. We've gotten a much sharper downtrend here with our white line to consider. So look for that to be a significant area for the bulls to need to break above. So 270 our gap downward. We have filled that here with our intraday highs. We haven't really recovered above them though. Another relative high here near 300. Another gap here would be filled near 318. So those are some levels to watch to the upside as well. Our moving average in this case shows that we have more of a downward acceleration here. Our three shorter term moving averages are five day our 21 day our 63 day exponential moving averages representing a week, a month and a quarter of trading days are starting to diverge apart while they're pointing downward here. So our fastest one is showing the most weakness here. Look for that to reverse. If we do start to close above some of these moving averages, and if their slope starts to shift upward. Meanwhile, our 251 day EMA in orange here representing one year, that one comes in near two tens. So that also marks a noteworthy downside area to be on the lookout for. If we do start to reach that moving average, that one would be the most significant if it were to be broken, if we were to to push through that area and continue the downtrend. RSI shows a downward slope. Here we are below the 50 mid line. Our green upward sloping trend line has been broken as well. So in this case, unlike our last chart, the point to watch now would be if we were to slip below that 30 line. That would demarcate the oversold area in this case here. So finally our volume profile study shows that we have several small but rather distinct nodes. We have one to the downside here centered around 210 or so. And then another one here to the upside near 275. Beyond that we have two small pockets of activity that nonetheless do stand out near about a 310 and 340 or so. All right. Right now ARM is continuing its descent. Today we're down about three quarters of a percent at 25134. This last one. I'm very curious about how you want to play here, because we're talking about Nike just seems to be on this relentless move to the downside. We're right down near 12 year lows. They've shed more than 75% of their value since its all time highs, which I think we're back in 2021. How are you looking at Nike, Don, and how would you trade this name right now? You know, I've actually I've come on here a number of times and I've been all Baird up about Nike. And those trades have actually played out very, very well. In this particular case. I'm actually I'm going to get bullish. I think it's actually worth the shot in around 40. So in or around 40. I mean again you got to go all the way back to like what 2014. So I know that Rick is going to look at the chart in just a moment. And I'm not sure that you know our technicals effective that far back, you're looking like, you know, 12, 15 years ago when again, just wild, wild sell side activity. So at $40, okay, I'm going to take the shot to the upside, but I'm going to give myself the gift of duration over here. Now look, I could, I could tell you, you know, a story about there's a turnaround going on. Look, that's a story that has supposedly been, you know, talked about for what the past year, year and a half. It has not played out. What I'm looking here is for a quick technical pop. I am not by any stretch of the imagination saying that like long term, this is the bottom at 40. I'm looking for actually a pop back from that 40 handle back up into like, you know, 47 half, maybe just over 50. And I'd be comfortable at that point. And that's exactly how I'm actually going to trade it. So giving myself kind of the gift of time with options, I'm going to go out to the November 20th options expiration. I'm going to buy the 40 two half calls. I'm going to buy the 40 two half calls. I'm going to sell the 50 two half calls against them. So I'm buying a full $10 wide call spread, which quite frankly in a $40 underlying to buy a $10 wide call spread. It's that's big. And this one's done for $1.90 debit. So I am taking a decent amount of risk for this $10 wide spread. But as I said, it's a little shorter duration. I think that there could be a decent sized pop. Is it going to get above 50 again. Well, if it is, I'm going to participate in it. But give myself again just a few months for this to effectively play out. It's almost like taking a long position in the stock without having to own the stock. That's the that's the logic I'm using here. All right. You said you like it right around 40. We are right around 40. We're at 4090. And right as you said, you don't know how useful the technicals would be on the long term chart. Rick pulled up the 15 year weekly for you so he can dive into those technicals. But want to mention to you we've got an earnings event included in this trade. Their earnings are on September 29th. So Rick as we look at the long term chart showing us near those 12 year lows right now what are you seeing. Yeah. Just to help illustrate kind of the scale of what we're talking about here. This is indeed a 15 year chart. So this line is at 51. So that that 50 area was a serious point to watch out for. That was a line in the sand that had not been breached. We came quite close a few months ago here at longer than a few months early 2025 or so, and then 2026. We broke down through it earlier this year. So now 40 is the area to watch. If we backtrack once more, we can see that that was a ceiling that we we formed several times here. So 40 to 50 on a long term basis really stands out as as a key areas here. And, you know, unfortunately for the bulls, the long term downward trend line is still in play here. So certainly a difficult situation for folks who've been long in this name over the past several years. Now to look more closely at our yearly chart once more, our green line here represented some old lows that we saw near 40, but we did indeed breach those 38. 86 is where our 52 week lows came out. This area here as well. Lows. Lows here an intraday low. And then this this kind of gives us this supportive area to watch out for between about 41 to 42. Roughly beyond that we had a range at the top of our range came in near 47. That seems fairly far away at this point, but the 5169 level here. So that that would be perhaps some technical basis for a strike around 52, because that would mean we would close the gap at that point there. So that level also caught my eye as I was preparing our chart set up here. So we can see now we have crossed above our short term moving average here in dark blue, but we have so far halted at our 21 day EMA and teal. So 40, 50 and 4150 are roughly where those two come in a little bit higher. And we would also possibly break above our trend line as well. That began in early May or so. RSI has not quite made its breakout yet. Our downward trend line is still in play and we do still remain below the 50 mid line. So that would be another bullish piece of information if we were to break above their volume profile shows us that the point of control, the heaviest trading area of all is at these lower levels. And we're below it right now. 4350 is where that one comes in. So this is typically interpreted as heavy trading activity at extreme lows usually reflects that. It's an important low point here. Certainly doesn't mean it's going to hold. And indeed it seems like there could be some trapped bulls hoping for a relief rally to to, you know, break out of this low area that we've been in and maybe, you know, parse back some of their gains or losses rather that they withstood here. Yeah. And they could perhaps be on the way to that. We are 2% higher today in Nike. We're at 4090 hovering right around that ceiling level that you highlighted there. Rick. Don, I want to thank you for being with us today for