Nike stock hits all-time high after blowout quarter

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The Dow Nike Inc. (NKE) component hit a record high in the $90s overnight after beating fiscal first-quarter earnings and revenue estimates by wide margins. Revenue grew 7.2% year-over-year despite pricing headwinds, showing the sportswear giant is adapting to the new world at a rapid pace. Nike also added the icing on the cake by raising the second quarter and 2020 guidance on the conference call, contributing to a euphoric buying reaction that added five points in just minutes.

This bullish price action signals a break above the 2018 and 2019 highs in the mid to upper $80s while opening the door to triple digits. Weak purchasing power in recent months had sent Nike tumbling amid the relative strength of the Dow Jones component, but the stock could now reclaim the leading position it held in the first half of the decade. . This is a truly impressive turnaround for a cyclical issue in the later cycles of an economic expansion.

NKE Long Term Chart (1992 – 2019)

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A multi-year uptrend stalled at a breakdown-adjusted $2.82 in 1992, giving way to a correction that bottomed out after a 50% haircut in 1993. The Rebound which followed made a round trip to the previous high in 1996 and broke out, but the rally ended just a year later at $9.55, setting a resistance level that went unchallenged for the next seven years. Shares of Nike traded narrow sideways throughout the bear market from 2000 to 2002, attracting little buying or selling interest.

A breakout in 2004 carved out two broad rallying waves from the March 2008 high at $17.57, giving way to an orderly downturn that shed roughly half the stock’s value during the economic meltdown. It settled at a three-year low in the first quarter of 2009 and rose sharply, returning to the previous high of 2010, before a breakout and a powerful trend advance that stalled in the upper $60s in December 2015 .

A two-year symmetrical triangle pattern produced another breakout in December 2017, triggering an uptrend that broke above $85 in October 2018. It successfully tested new support on the December decline and rebounded in April 2019, when purchasing power dried up a few points above the previous high. April and July breakout attempts failed, while last night’s news finally did the trick, lifting the stock to an all-time high of $92.65 in the pre-market session of Wednesday.

The Monthly Stochastic Oscillator entered a long-term bullish cycle midway through the panel in August 2019, showing unusual strength. It still hasn’t reached the overbought level, indicating that the stock could trade even higher in the coming weeks with relative ease. Psychological resistance at $100 offers a logical target on the upside, with this level triggering an extended testing phase that could last well into 2020.

NKE Short Term Chart (2017 – 2019)

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The on-balance-sheet volume (OBV) accumulation-distribution indicator reached a new high in 2015 and entered a distribution phase that continued until October 2017. Impressive purchasing power reached the previous high a year later, eventually producing a breakout in April 2019. OBV has been moving sideways above new support since then and is expected to hit a new high with price this week. And, while it seems unlikely, failure to attract significant buying power at this point would mark a bearish divergence that challenges this week’s breakout.

The slightly higher highs in place since September 2018 should also be watched closely in this regard, as the sequence of highs and lows have carved an upward curve, with resistance just at the pre-market high above 92 $. The stock will struggle to trade above the upper black line if this bearish formation controls the band, which often runs at major market highs.

The essential

Nike stock hit a record high after a rocky quarter, but euphoric shareholders should keep an eye out for a one-year wedge pattern that could eventually end the long-term uptrend.

Disclosure: The author held no position in the aforementioned titles at the time of publication.

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