Nike Merits a New Downward Price Target as It Slumps After Earnings

We reviewed the charts of sneaker and apparel maker Nike (NKE) on Sept. 20, when we wrote: "The charts and indicators of NKE are pointed down so traders should avoid the long side of NKE for now." The weekly Point and Figure chart gave us a $92 price target, which is being left in the dust here on Friday morning after Nike posted lower fiscal first-quarter earnings and offered a weak outlook.  

Let's check again Nike's charts again. 

In this daily Japanese candlestick chart of NKE, below, we can see a weak setup. Prices are in a downward trend. Prices are trading in the $87-$86 area in the pre-market -- off the bottom of this chart. The slopes of both the 50-day and the 200-day moving average are negative (bearish). The On-Balance-Volume (OBV) line tells us that sellers of NKE have been more aggressive with heavier trading volume seen on days when NKE has closed lower. The 12-day price momentum study is not slowing down and thus no bullish divergence to foreshadow a possible bounce. 

In this weekly Japanese candlestick chart of NKE, below, we see a bearish picture. Traders who are looking back to 2020 for potential areas of support are likely to be disappointed. Prices are in a longer-term decline. The slope of the 40-week moving average line is bearish. The weekly OBV line is bearish. The 12-week price momentum study tells us that the pace of the decline has slowed but it has not translated into a price low. 

In this daily Point and Figure chart of NKE, below, we can see a new and lower price target in the $77 area. 

In this second Point and Figure chart of NKE, below, we can see the same $77 target. 

Bottom line strategy: We continue to recommend that traders and investors avoid the long side of NKE. Further declines are anticipated.

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