One of the Dow stocks could hit record highs, if history repeats
The Dow is in rebound mode today, up nearly 200 points thanks to strong blue-chip earnings and a just-passed tax reform bill in the House. What's more, a couple of Dow stocks could outperform in the short term, if recent history is any indicator. Below, we'll explain why Nike Inc (NYSE:NKE) and UnitedHealth Group Inc (NYSE:UNH) stocks should be on your bullish radar right now.
Nike Stock Rocks Before Black Friday
Of all 30 Dow stocks, NKE has the best win rate during the week of Black Friday. Over the past 10 years, Nike shares have ended the holiday-shortened week in the black nine times, averaging a gain of 2.1%, according to recent data from Schaeffer's Senior Quantitative Analyst Rocky White.
Nike stock has been a beast since touching a near-term low around $50.50 about a month ago, rallying more than 13% to trade at $57.10. In fact, the athleisure concern is on pace to end north of even its Oct. 26 high, brought on after the company issued upbeat sales guidance for the next five years. The stock could now find a floor in the $56-$56.50 neighborhood, which has acted as both support and resistance in 2017, and another 2.1% gain next week would place the equity around $58.30, where it was trading before an August bear gap.
And, should Nike shares extend their recent jog higher, an exodus of bears could add fuel to the fire. Not even half of the analysts following NKE consider it worthy of a "buy" or better rating, and short interest skyrocketed more than 24% in the most recent reporting period. An round of upgrades or a short squeeze could propel the stock even higher.
Likewise, the security's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.21 -- higher than 84% of all other readings from the past year. In other words, options buyers have picked up bearish bets over bullish at a faster-than-usual clip lately. A unwinding of pessimism in the options pits could also be a boon for NKE.
UNH Boasts the Biggest Blue-Chip Gains
While Nike sports the best win rate during the week of Thanksgiving, UnitedHealth stock tends to rack up the biggest blue-chip gains. Specifically, UNH has ended the holiday-shortened week higher eight of the past 10 years, averaging a gain of 3.48%.
The healthcare stock has been outstanding in 2017, rallying more than 31% atop its 80-day moving average. The shares were last seen trading at $210.93, up 1% on the day, and just a stone's throw from last week's record high of $213.93. Another 3.48% rally next week would place UnitedHealth stock around $218.27 -- in uncharted territory.
However, unlike NKE, most of Wall Street is already in UNH's corner. Just one of 18 analysts doesn't consider the equity a "buy" or "strong buy," and the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 4.08 is in the 99th percentile of its annual range, suggesting options buyers have bought to open UnitedHealth calls over puts at a very accelerated pace in the past two weeks.