Nike Stock Alert: Why stocks are fading after earnings rally

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Nike Stock (NKE) are up 3% on Tuesday after its earnings report.

The company delivered a beat of profits and revenue, although the former was down 3.3% year-on-year and the latter was up less than 5%. But the numbers were better than expected as supply chain issues continued to plague many businesses.

Direct sales soared 17%, which surely boosted buyer confidence as stocks rose higher. But bulls may also be a bit disappointed with this decision, especially with the overall market moving significantly higher on the day.

High quality retailers – like Target (TGT) and Costco (COST) — have responded well to earnings so far, but Nike is in a bit more of a gray area. It is both a retail and a clothing company.

This is one of the reasons why the bulls continue to encourage its direct-to-consumer sales, which expands its margins.

Even after the stock’s 12% rally from last week’s low, bulls are surely a bit disappointed with the stock. They shouldn’t be surprised though.

Trading Nike Stock

Daily chart of Nike stock.

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I say this because Nike is rallying at a key area of ​​the chart: $139.50.

It was a support zone that failed in late February as Nike stock really started to reverse.

Now that the stock is back up, it’s no surprise that what was support is now acting as resistance. Additionally, the bulls had to deal with the falling 10-week and 50-day moving averages.

Put it all together and there were just too many key areas for Nike stock to pick up. From there, it will be interesting to see how it trades.

If it can clear today’s high and recover those key levels and metrics, then we could see a push towards the mid $140s. Above it opens the door to the 50-week moving average near $150 and then the 200-day.

On the downside, keep an eye out for $132.31, which is the gap fill after the profits. If Nike pulls back and fills the void, I think we may also need to keep an eye on the 10 and 21 day moving averages, which were active support heading into last week’s rally.

Nike stock has made a powerful and remarkable rally over the past few days. Now we also have a better than expected revenue report.

At this point, it would be more constructive to hold the 10-day and 21-day titles and for the title to become more constructive on the long side.

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