Nike is not cheap because its p / e ratio is 39.68 with a dividend yield of 0.74%, according to Macrotrends. The company has now beaten EPS estimates for five consecutive quarters, but the company is seeing reduced revenue growth due to stockouts and supply chain bottlenecks.
The daily chart for Nike
Nike was trading around its annual pivot of $ 134.57 between November 9, 2020 and June 24, 2021. A positive reaction to the quarterly results released on June 24 caused the price differential to increase on June 25.
On June 21, a false cross of death ended with a gold cross confirmed on June 30. When the 50-day simple moving average exceeds the 200-day simple moving average, a golden cross is confirmed. This buy signal led to the establishment of the all-time intraday high of $ 174.38 set on August 6.
At the start of the third quarter, Nike was closing above its quarterly pivot at $ 157.14. This level was maintained on July 19, providing support for the passage to the all-time high.
The close below the 50-day simple moving average (in blue on the chart) provided a warning on September 2. The 50-day SMA turned resistance on September 9 and the stock fell to its 200-day simple moving average which held steady at $ 145.39 this week.
If the 200-day SMA holds the stock, it should bounce back to the half-yearly pivot at $ 152.14. Otherwise, the downside risk reverts to the annual pivot at $ 134.57.
The weekly chart for Nike
Nike’s weekly chart remains negative. The stock is below its modified five-week moving average at $ 157.02. The stock is still well above its 200-week simple moving average or its reversion to the $ 99.55 average. The 12x3x3 Weekly Slow Stochastic Reading is down to 45.41.
Trading strategy: Buy Nike on weakness up to its 200-day simple moving average at $ 145.39 and add positions to the annual pivot at $ 134.57. Reduce holdings in force at semi-annual and quarterly pivots to $ 152.14 and $ 157.14, respectively.