During Friday's Mad Money program Jim Cramer outlined what he was watching this week. He noted that on Tuesday we get earnings from Nike (NKE) . He was bullish on Nike's direct-to-consumer business.
We last reviewed the charts of NKE on August 12 and wrote that, "NKE is laced up and moving higher. Traders should go long at the market risking a close below $101. The $127 area is our first upside price objective."
Let's check on the charts again this morning for this Action Alerts PLUS holding.
In the daily bar chart of NKE, below, we can see that the shares did not reach our $127 price target. Prices are comfortably above the rising 50-day moving average line and the rising 200-day moving average line.
The On-Balance-Volume (OBV) line shows a rising pattern until weakness last week. The recent turn lower for the OBV line tells us that sellers have turned more aggressive on NKE.
The 12-day price momentum study shows lower highs from August into September and that is a bearish divergence when compared to the price action with prices making higher highs. A slowing pace to the advance is a heads up or warning sign of a possible reversal. This is not a clear cut sell signal but rather a notice that things are changing.
In the weekly bar chart of NKE, below, we can see two bearish divergences. The shares are in an uptrend above the rising 40-week moving average line but we know this is a lagging indicator.
The weekly OBV line shows strength in August but the bigger picture is that the line is well below its early 2020 highs and thus is a bearish divergence when compared to price. The OBV line has not confirmed the new price highs. The 12-week price momentum study shows lower highs from June to September, which tells us that even though the uptrend is still intact the pace of the rally has slowed.