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Book Profits On Nike–Here’s Why

By News Creatives Authors , in Business , at August 6, 2021

Nike

NKE
opened Friday, August 6 at a fresh all-time intraday high of $174.38. This is just shy of its weekly risky level at $176.63. The stock moved towards this risky level following a golden cross formation that was confirmed on July 1. The weekly chart has been positive but overbought since the week of July 23. Its 12x3x3 weekly slow stochastic reading is 92.00 which puts the stock in an inflating parabolic bubble formation.

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.

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