The Dow Stock That's In A 'Death Cross'

Nike Inc NKE is among the most struggling stocks on the Dow, trading flat since the start of 2017 and down nearly 2 percent over the past year. But with the stock flirting with its 52-week lows, investors who are hoping for a rebound might find themselves on the wrong side of the trade, said Matt Maley, an equity strategist at Miller Tabak. 

Nike's stock entered into a "death cross" this week, which occurs when a stock's longer-term moving average crosses over the short-term moving average, Maley said during a recent CNBC "Trading Nation" segment. But this isn't one of the more commonly used technical analysis tools, as the last time Nike's stock entered this "death cross" was back in late June, and the stock actually rallied 10 percent higher the next day in reaction to a solid earnings report.

Other analytical tools that are more important imply a poor outlook for the stock, Maley said: Nike's stock is also testing its 200-week moving average and risks trading below the average for the first time since 2009.

Granted, some investors and traders would likely expect Nike's stock to hold at the 200-week level, he concluded. But if the stock fails to find support a lot of long-term investors, especially the "most strident bull will have to consider throwing in the towel on the stock."

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