Nike is not cheap as its p/e ratio is 39.68 with a dividend yield of 0.74%, according to Macrotrends. The company has now beaten EPS estimates in five consecutive quarters, but the company sees reduced revenue growth on inventory shortages and supply chain bottlenecks.
The Daily Chart for Nike
Nike was trading around its annual pivot at $134.57 between November 9, 2020 and June 24, 2021. A positive reaction to quarterly earnings released on June 24 caused the price gap higher on June 25.
On June 21 there was a false death cross that ended with a golden cross confirmed on June 30. When the 50-day simple moving average rises above the 200-day simple moving average a golden cross is confirmed. This buy signal led to the setting of the all-time intraday high of $174.38 set on August 6.
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As the third quarter began, Nike closed above its quarterly pivot at $157.14. This level held on July 19 providing the support for the move to the all-time high.
The close below the 50-day simple moving average (in blue on the chart) provided a warning on September 2. The 50-day SMA became a resistance on Sep. 9 and the stock declined to its 200-day simple moving average which held at $145.39 this week.
It the 200-day SMA holds the stock should rebound to the semiannual pivot at $152.14. Otherwise, the downside risk is back to the annual pivot at $134.57.
The Weekly Chart for Nike
The weekly chart for Nike remains negative. The stock is below its five-week modified moving average at $157.02. The stock is well still above its 200-week simple moving average or reversion to the mean at $99.55. The 12x3x3 weekly slow stochastic reading is declining at 45.41.
Trading Strategy: Buy Nike on weakness to its 200-day simple moving average at $145.39 and add to positions at the annual pivot at $134.57. Reduce holdings on strength to the semiannual and quarterly pivots at $152.14 and $157.14, respectively.