Nike Inc (NKE) Stock Could Lose ANOTHER Shoe

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It wasn’t too long ago when shares of sporting goods stocks such as Nike Inc (NYSE:NKE) and Under Armour Inc (NYSE:UAA) were all the rage for growth bulls. These days, however, the picture for either of these two stocks (at least from a technical perspective) is anything but rosy. Barring any positive outside news, the path of least resistance for NKE stock appears to point lower.

Beat the Bell: Nike Inc (NKE) StockJust like trends in fashion change over time, so does investor appetite for any given sector or industry. Usually, this change in investor appetite comes upon the realization of more or less demand for a company’s or sector’s products or services. Other times, a perceived shift in government policy, interest rates or other variables can at least temporarily shift demand into or out of a group of stocks.

My point is that whatever the underlying force for a shift of demand from one sector or group of stocks to another, these shifts are a fact of investing. Regardless of how great a growth story any given stock may have, ultimately it will come to a point where demand for the stock at least temporarily shifts and a corrective phase sets in.

Put differently still: Stocks don’t rise linearly into infinity. Eventually a day of reckoning arrives. The quicker that investors and traders react and respect the day of reckoning, the more they can protect their hard-earned profits.

Unfortunately for Nike stock bulls, it appears we’re reaching that point in the venerable athletic retailer.

NKE Stock Charts

Looking at Nike through a multiyear lens, we note that the orderly multiyear uptrend abruptly ended in late 2015. The stock has been stuck in an equally well-defined downtrend ever since.

NKE stock charts weekly view
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In percentage terms, the drop in NKE stock from late 2015 into the November 2016 lows measured close to 30%. However, from a technical analysis perspective, some more price discovery to the downside looks likely toward the 200-week simple moving average (red).

On the daily chart, we see that the August 2016 lower high in NKE stock coincided with the purple diagonal line of resistance as well as the 200-day moving average (red).

NKE stock charts daily view
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The rally off the November 2016 lows in late January 2017 also began to lose steam at the same two lines of resistance.

At this point, barring a notable change of wind that pushes Nike stock back above the $55 area on a daily closing basis, the path of least resistance remains lower.

In specific, a break below $51.50 on a daily closing basis could resume the downside trend in NKE stock toward a first price target around the high $40s, which would also coincide with the aforementioned 200-week moving average.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/02/nike-inc-nke-stock-could-lose-another-shoe/.

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