In early January we thought that Nike (NKE) could rally to $59 and contribute to the run up to Dow 20,000, but unfortunately it looks like the bounce in the shares have run their course. Let's check our updated charts and indicators.
In this daily chart of NKE, below, we can see that the stock has been unable to break above $54 despite several attempts last month. NKE is currently testing the rising 50-day moving average line and remains below the declining 200-day moving average line.
The On-Balance-Volume (OBV) line has not shown any up-movement in the past month and that tells us that buyers are not aggressive and not trading more shares of NKE on days when the stock closes higher. The Moving Average Convergence Divergence (MACD) oscillator has rolled over and signaled a liquidation longs sell signal. It won't take much for the MACD to slip below the zero line for an outright sell signal.
In this three-year weekly chart of NKE, below, we have mixed signals. NKE is below the declining 40-week moving average line so we can say the major trend is still down. The weekly OBV line has been flat the past four months and that suggests that there is little accumulation going on.
In the lower panel is the MACD oscillator on a weekly timeframe and it shows a recent cover shorts buy signal and that strength may have already played itself out on the rallies to $54.
Bottom line: If NKE closes below $52 on increased volume it could precipitate further price weakness. A strong close above $54.50 is needed to get NKE moving on the upside.