Nike will report earnings after the close on Tuesday. Here’s how the charts look ahead of the print.
Nike (NKE) – Get Free Report stock has traded well over the past few months, but the past few days haven’t been a walk in the park.
When the company last reported earnings on Sept. 29, Nike stock fell 13% in the following session. It hit a 52-week low in the next session and then traded significantly higher, climbing to roughly $116.50 just last week.
Obviously, the bulls are hoping the stock can continue its recent run and not have a repeat of last quarter.
Retail earnings were mixed this quarter but for the most part were received pretty well by the market. That said, the S&P 500 was in the midst of a strong rally at that time vs. the selloff we’re seeing now.
It doesn’t help that investors did not react well to Lululemon’s (LULU) – Get Free Report earnings report on Dec. 8. Those shares are down more than 17% since then.
Trading Nike Stock Ahead of Earnings
Daily chart of Nike stock.
Chart courtesy of TrendSpider.com
When we looked at Nike ahead of its previous earnings report, I highlighted the $85 area as a potential dip-buy spot. The shares ultimately bottomed at $82.22, a bit lower than we expected, but the reaction out of this zone was robust.
Now that the stock has run so much, the approach is a bit different.
Notice how Nike stock ran right into the 50-week and 200-week moving averages. For traders who use only the daily charts, this might be a lesson in how a multi-timeframe approach can be advantageous.
As for the levels, the bulls would love to see the $100 area hold on a dip. Not only is that a key psychological level, but it’s also where the 50% retracement and 50-day moving average come into play.
While that is only a small dip from current levels, keep in mind that the shares are now down 12.5% from last week’s high.
A bit below this zone could put the $94 to $95 area in play, which gets us the gap-fill and 61.8% retracement.
On a bullish reaction, it’d be constructive to see a move north of $110.50. That is a big move, but will get Nike stock back above the 10-day, 10-week, 21-day and 200-day moving averages.
If we saw that type of reaction, it’d be important to see a close above $110.50, not just a rally to this level. A close above it puts the recent highs back in play.
