Nike (NKE) – Get the report from Nike Inc. the stock looked like it could rally on Tuesday morning, but the stock has since reversed its early post-earnings gains.
The shares opened down on June 28 by 2%, but then turned around and turned positive. At the high, shares rose more than 3% on the session.
Nike beat profits in terms of highs and lows, but below the surface there were a few issues. Margins were lower than expected and earnings were down slightly year over year.
To help ease some concerns, the company even announced an $18 billion buyout plan.
Many investors feel, “All things considered, Nike had a strong quarter.” And you know what? They are right. This has been a good quarter, but now the stock is moving lower.
Going into the report, shares were down around 37% from the all-time high. The $103-$105 area has been strong support. Will it still hold?
Trading Nike Stock
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Look at how strong the $103-$105 zone has been for Nike shares.
Not only is this level recent support, but it is also the 61.8% retracement as we measure from the all-time high to the Covid-19 low in March 2020. Additionally, the $105 zone is also a major breakout zone, which was resistance before and after the covid liquidation.
Holding this zone would be considered a big win for the bulls, in my opinion. If this zone is lost, it almost immediately opens up the possibility for him to test $100 and potentially break below.
If $100 does not hold as support, $91 may be in play, which is the 161.8% downside extension from the June high to the May low.
Below and the 78.6% retracement stands out near $85. Based on current price action, it does not appear that the covid low at $60 is on the table, although in an extended bear market it could become the case.
For now, $100-$105 is the level to hold on to and investors need not panic until this observation turns false.
On the upside, the 200-week moving average has been resistance for the past few weeks, while the 10-week moving average has active resistance. If Nike can hold $100 to $105 and Clearing these metrics, we might be looking at a push into the $120-$125 area.
The quarter may not have been too bad and Nike can be a great long-term company. In fact, I believe both are true. However, the charts tell us a different story at the moment and at the very least, that story urges caution until resistance is eliminated.