Nike's Tiger Rally Fizzles, But Technical Picture Still Bullish
Nike Inc (NYSE:NKE) got a big boost on Monday morning after Tiger Woods won his first major golf title in a decade Sunday when he took home the green jacket at the Masters.
Tiger earned more than $2 million in prize money, and Nike investors also got a win when the stock climbed as high as $87.24 in early Monday trading. Unfortunately, the rally didn’t last for long, and Nike’s near-term technical outlook is cloudy.
Nike investors hoping Tiger’s big win would send the stock to new all-time highs will need a bit more patience. Nike traded as high as $88.59 in early March prior to its earnings report, but fell back down to below $81 when fiscal third-quarter North American sales disappointed the Street. Nike found near-term support at $81 and has since krept steadily higher, closing last week at $86.24.
Even after Monday's mid-day pullback, Nike is still trading at its highest level since last month’s earnings miss. The big breakout may have happened ahead of Tiger’s win last Friday when the stock closed above $86, a level that served as resistance earlier this month. If Nike shares can finish Monday’s session above $86 on the strength of Tiger’s win, Friday’s bullish breakout may be confirmed.
With $86 now serving as near-term support, Nike could be set up for a re-test of all-time highs at $88. On the other hand, if $86 doesn’t hold this week, a re-test of recent support levels at $84 and the post-earnings low of $80.89 could be coming.
From a longer-term perspective, Nike’s technical picture looks just fine. The pre-earnings rally to $88.59 exceeded the stock’s previous all-time high of $85.57 back in September 2018. The stock bounced in the $68 to $70 level three times in October, November and December of 2018. That $68 to $70 range was previously a resistance level throughout most of the first half of 2018. Until Nike trades below $68, the longer-term technical outlook for the stock remains bullish.
Key Levels This Week
This week, traders will be focused on $86 as the support level that needs to hold for an immediate push to all-time highs at $88.59. If $86 breaks down, look for more sideways consolidation in the $81 to $86 range in the coming weeks. A breakdown below $81 could mean a re-test of late 2018 support in the $68 to $70 is on the way in the medium term.
At time of publication, Nike's stock traded at $86.77 per share.
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