Nike ended Thursday at $173.87, up 22.9% year-to-date. Its up 189.8% since trading as low as $60.00 back on March 18, 2020. It’s time to lock in most of this gain.
The stock is not cheap. Its p/e ratio is elevated at 48.29%. Its dividend yield is just 0.64%. If you are buying this stock now beware that you are chasing momentum. When you do this, you should also employ a sell stop.
The Daily Chart for Nike
Nike had been trading around its 50-day simple moving average until June 25 when there was a breakout to the upside. This was caused by better-then-expected quarterly earnings reported after the closing bell on June 24.
Note that there was a false death cross on June 21 when the 50-day simple moving average fell below the 200-day simple moving average. This was quickly offset by a golden cross formation confirmed on June 30 when the 50-day moved above the 200-day. This led the stock to its all-time high of $174.38 set this morning.
The horizontal line at the top of the chart is the weekly risky level at $176.63. The next two lines are the quarterly and monthly value levels at $157.14 and $154.48. The lowest horizontal line is the annual value level at $134.57.
The Weekly Chart for Nike
The weekly chart for Nike is positive buy overbought with the stock above its five-week modified moving average at $158.95. It’s well above its 200-week simple moving average or reversion to the mean at $95.38. The 12x3x3 weekly slow stochastic reading is rising at 92.12. This reading is above 90.00, which puts the stock in an inflating parabolic bubble formation.
Trading Strategy: Buy Nike on weakness to its quarterly and monthly value levels at $157.14 and $154.48. Reduce holdings on strength to its weekly risky level at $176.63.