Nike Inc. (NKE) is trading softer in the pre-market so this may be a good time to check our charts and indicators. We last looked at the charts in May, when we said, "NKE has not been involved in playing offense for a while now and further declines in prices are anticipated. A break of $49 could mean we decline to $45 or even $37 in the months ahead."
With hindsight we can see that NKE held $51 in late May and again in June. There was a six-week rebound to around $60 but last month prices plunged to $52. Very unnerving for investors and gut wrenching for short-term traders caught on the wrong side of two large gaps.
Let's drill down in the charts and indicators.
In this daily bar chart of NKE, above, we can see that prices have been on a roller-coaster ride the past 12 months. Prices have swung sharply above and sharply below the 50-day and the 200-day moving averages. Currently prices are below the declining 50-day average line and below the rising 200-day line. The volume histogram below the price chart is hard to understand as surges in volume come on down moves and up moves -- clearly traders have been caught off sides a number of times.
The daily On-Balance-Volume (OBV) line has been weak for much or most of the past 12 months. This weakness in the OBV line tells us that sellers of NKE have been more aggressive than the buyers. In the bottom panel of this chart is the 12-day momentum study, which does not show us a bullish divergence in the August decline.
In this weekly bar chart, above, we can see large sideways trend for NKE going back to early 2016. Prices have been below the 40-week moving average line for much of this sideways period. The weekly OBV line has moved up and down with the price action the past two years but overall it is down from its 2015 peak. The weekly Moving Average Convergence Divergence (MACD) oscillator is pointed down to the zero line and is in a bearish mode.
In this Point and Figure chart of NKE, above, we can see the sideways trading range market differently from the weekly bar chart (above). Overall there has been more price activity in the upper half of this chart, above $55 or so. More activity in the upper half of a pattern implies distribution or more failures to move higher. This chart shows a downside price target of $44.67. A break of $51.53 is bearish and a break of $50.01 is more bearish.
Bottom line: The long side of NKE is not the place I want to be. A break below $52, the nearby lows and then the May/June lows around $51 will open the way to further declines.