PreMarket Prep Stock Of The Day: Nike

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

Several sectors have benefitted from the rotation out of growth stocks and into other sectors. One sector that's also benefiting from the “reopening trade” is retail.

One retailer that just came up shy of an all-time high this week but has backed off after its third-quarter earnings report is Nike Inc. NKE.

Dip Than Major Rip: After ending 2019 at $101.31, Nike's stock went on to make a new all-time high in January at $105.63 but weakened to end the month at $96.30. It continued lower in February and bottomed with the S&P 500 index in March at the bargain price of $60.

That low came in above between its December 2017 low ($59.23) and below a pair of monthly lows from January ($62.55) and February 2018 ($62.09). It more than doubled from that low, making its all-time high in December at $147.96, and ended the year at $141.47.

Not A Runner In 2021: While the index forged to new all-time highs this year, Nike hasn't really participated. The good news is it bottomed in January ($130.27), but the bad news is that rebounds in January ($147.10) and February ($145.98) all came up shy of its all-time high.

In fact, it flirted with that level on three occasions this week with daily highs in the $146 handle, with the highest one being on Thursday at $146.66.

Mixed Q3 Report: After Thursday's close, the company announced EPS of 90 cents versus the 76-cent estimate, and sales of $10.36 billion that missed the $11.02 billion estimate.

Greater China sales were up 51% year over year and brand digital sales up 59% year over year. However, North American sales were down 10% year over year, the direct result of supply chain challenges.

Street Focuses On Sales Miss: With the issue hovering at all-time highs, a big beat on both EPS and sales was needed for another leg higher. However, the sellers just under the all-time high this week were rewarded for exiting the issue.

In after-hours trading following the report, the issue raced to $135, down from the close of $143.17, but was able to stabilize at the $140 ahead of the open. After opening at that level, it could manage a rally to $140.49 before sellers engulfed the issue.

As of 1:15 p.m. EST, the ensuing decline took the issue to $135.51 and bounced back into the $137 handle. The current low matches its March 8 low ($135.45).

Moving Forward: For now, the issue has in place a double-bottom that could be the springboard to get back into the $140 handle. If that area is breached, the next daily low isn't until its March 8 low ($132.37), another open area down to its March 5 low ($129.18).

If Nike can mount a rally and clear the current high, it will two resistance areas to contend with, the first one being the bottom of Thursday’s range ($142.55) and the close ($143.17).