The Arena

The S&P 500 appears to be headed lower after a major decline last week that culminated in an even bigger drop on Friday. Additionally, the Federal Reserve seems hawkish again as most Americans have acclimated or are acclimating to higher prices on everything from staples to discretionary items. That said, I’m at a loss as to why exactly. Sometimes doing nothing or just staying the course is the right move, in my opinion. Ah, what do I know, lets get hawkish, close our eyes, throw the steering wheel out the window, and punch the gas! That ought to fix everything, right?

With that, its probably good advice to tread carefully with respect to longer term bullishness. My general assumption is that at some point in the next year we’re going to see SPY trading below 300 and possibly lower. However, the sooner we can get there, I think the sooner we can start talking again about long term bullishness. I guess time will tell.

The Coach

Academy Sports and Outdoors (ASO) has watched its share price double in the past few months which would lead most to believe bullish is the way to play. However, given the nasty double top that formed a little over a week ago I may move forward carefully. Furthermore, if I were wanting to own shares I would ease into Academy Sports and Outdoors very slowly and over an extended period of time.

From a technical standpoint, all signs point to a bearish move ahead and while that seems fantastic on the surface the market does like to play games. Although, for us options traders we don’t care much for games, we want a move in one direction and we want it now. That said, I do suspect we’ll get a push back to the 46$ level again at some point.

From a fundamental perspective, ASO seems very capable of moving as high as $80 per share but exactly when we see that is anyone’s guess. With the market seemingly set on a move lower its possible we don’t see the bullish trend here continue for some time. Although, I’ve been wrong once before, so take that as you will.

For more on the outlook for Academy Sports and Outdoors consider browsing through StockTwits.com to get a grip on what other market participants are thinking.

Academy Sports & Outdoors (ASO) Stock Price Chart
Academy Sports & Outdoors (ASO) Stock Price Chart
Academy Sports & Outdoors Fundamental Analysis
Academy Sports & Outdoors Fundamental Analysis

The Attack

Academy Sports and Outdoors is a capable long term play from my assessment. I don’t dislike their business and I think in most areas across America they are the primary sporting goods source. They don’t pay a great dividend so that largely excludes them from my personal investment portfolio. However, given the recent double top formation and the fact price fell immediately I don’t suspect much near term bullishness.

Therefore, I’ll be looking to trade a Bear Put Spread with earnings coming up on the hope price will continue its fall and volatility will rise up. Only time will tell if this pays, but I think it makes sense while staring a bearish overall market and a renewed hawkish Fed in the face. Hold the phone though, don’t the markets do the exact opposite of what everyone expects? I guess we’ll see how it goes…

Bullish Assumption

Buy To OpenSell To OpenEntry OrderMax ProfitProb. of 50% Profit
21 OCT 22 42 Call21 OCT 22 43 Call$50.00$50.0067%

Bearish Assumption

Buy To OpenSell To OpenEntry OrderMax ProfitProb. of 50% Profit
21 OCT 22 42 Put21 OCT 22 41 Put$40.00$60.0060%

God Bless,
Jeff

*This post is NOT a recommendation to buy, sell, or trade any security. The information provided within is strictly for entertainment. Traders or investors should always consult a registered financial professional prior to trading or investing.