Nike Just Hit an 8-1/2-Year Low. Here's What Its Chart Says Heading Into Earnings
Nike plans to report earnings next week at a time when the shoe-and-apparel giant's stock is trading at about an 8-1/2-year low, having fallen some 70% since its November 2021 all-time high. Let's see what its chart and fundamentals can tell us.
Nike's Fundamental Analysis
$Nike(NKE)$
That would represent a 46.2% drop from the $0.54 in GAAP EPS that Nike reported for the same quarter last year, as well as a 0.4% sales contraction from the year-ago period's $11.27 billion of revenue.
Interestingly, just three of the 23 analysts that I know of who track the stock have revised their estimates since the quarter began – even though the group's earnings forecasts span from $0.24 to $0.35 in GAAP EPS.
Two analysts have downwardly revised their numbers, while one did an upward revision. The remaining 20 analysts have sat on their hands.
Nike's Technical Analysis
Next, let's look at NKE's chart going back some nine months and running through Tuesday afternoon (March 24):
We will see that Nike has produced two double-top patterns of bearish reversal since last summer, as marked with red boxes and pink shading at the above chart's left and right.
Both patterns worked as one might have thought, with Nike stock falling each time.
The second double-top pattern occurred just recently, bearing a $60 apparent pivot. Nike appears to have bottomed out (at least for now) coming out of that second double top, falling to a $52.18 intraday low on March 20. That's the stock's lowest trading level since October 2017.
So, what are the technical indicators telling us?
First, we will see that NKE has now completed a 100% Fibonacci retracement of its April 2025-to-August 2025 rally, as shown by the gray horizontal lines and gray shading above.
As that's been happening, the stock's Relative Strength Index (or "RSI," marked with a squiggly gray line at the chart's top) appears to have come out of a technically oversold state.
And while Nike's daily Moving Average Convergence Divergence indicator (or "MACD," denoted by blue bars and black and gold lines at the chart's bottom) is still postured rather bearishly, it's showing a few technical positives.
For one thing, the histogram of Nike's 9-day Exponential Moving Average (or "EMA," marked with blue bars) is approaching zero from below. A move into positive territory would be technically bullish.
On top of that, the stock's 12-day EMA (the black line) is moving upward toward its 26-day EMA (the gold line). A crossover of these two lines would represent a bullish signal as well.
An Options Option
Bullish options traders are likely using Nike's 21-day EMA (the green line above) as a pivot for what's known as a bull-call spread.
That's where you buy one call and sell another with a higher strike price, but where both expire on the same day. Here's an example:
-- Long one NKE call with an April 2 expiration (i.e., after next week's earnings) and a $57 strike price. That cost about $1.20 at recent prices.
-- Short one NKE April 2 call with a $61 strike price. That would currently bring in a roughly $0.40 credit.
Net Debit: $0.80.
Such traders are trying to bring in $4 while risking an $0.80 net debit, for a $3.20 maximum theoretical net profit. They would realize this if NKE trades at or above $61 at expiration.
Conversely, this trade's maximum theoretical loss is the $0.80 net debit. Investors would see that if NKE traded at or below $57 at expiration.
Disclaimer: The information provided is NOT financial advice. I am not a financial adviser, accountant or the like. This information is purely from my own due diligence and an expression of my thoughts, my opinions based on my personal experiences, and the way I transact.
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