In our May 23 review of Nike (NKE) we forecast a rebound in price but a sell-side firm lowered their price target of the apparel maker to $150 from $160. My view of the charts is that prices are headed higher as we wrote that "Aggressive traders could go long NKE at current levels risking a close below $103. On strength above $118 traders could increase their exposure. I look for a rebound into the $125-$130 area, maybe higher."
Let's check on the indicators again.
In this daily bar chart of NKE, below, we can see that price rebounded in late May. Prices quickly got to the underside of our first target zone of $125-$130 and tested the underside of the declining 50-day moving average line. The slope of the 200-day moving average line is still negative and intersects around $146.
The On-Balance-Volume (OBV) line has turned upwards and is close to breaking its downtrend from November. A shift to aggressive buying is a bullish signal.
The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside in late May for a cover shorts buy signal and is now close to crossing the zero line for an outright buy message.
In this weekly Japanese candlestick chart of NKE, below, we can see a bullish reversal pattern - a bullish engulfing pattern with confirmation. This reversal looks like a turn from down to up and not a turn from down to sideways. The slope of the 40-week moving average line is negative but this is a lagging indicator.
The weekly OBV line has been in a decline from early 2021 but the latest uptick is a good start towards a more bullish posture. The MACD oscillator has narrowed since our last check and is nearing a weekly cover shorts buy signal.
In this daily Point and Figure chart of NKE, below, we can see an upside price target of $161.
In this weekly Point and Figure chart of NKE, below, we can see the same price target as the daily chart (above).
Bottom line strategy: Continue to hold longs from our May recommendation. Raise stops to $110 from below $103. Our price targets are now the $125-$130 area followed by the $160 area.
