Nike Inc (NYSE: NKE) opened with a negative gap yesterday and continued to trade south during the session. In our view, this may have been an early sign that the rebound started last Friday may have come to an end. Overall, although it continues to trade above the tentative upside support line drawn from the low of October 12th, 2017, the stock appears to be in a sharp downside corrective mode.
A break below 89.15 could confirm that there is room for another leg down, perhaps paving the way towards last Friday’s low of around 85.10. If that barrier does not hold this time around, we may see the correction extending towards the crossroads of the aforementioned upside line and the 0.8372 zone, marked by the inside swing high of August 22nd.
Looking at our daily momentum studies, we see that the RSI, although it rebounded and exited its below-30 zone, it stays below 50, and has just ticked back down. The MACD lies below both its zero and trigger lines, pointing south as well. Both indicators suggest that the stock may have started regaining downside speed, adding to our view over another negative leg, at least until the pre-mentioned long-term upside support line.
In order to start examining whether the negative correction is over, we would like to see a strong move above 94.90, which is Tuesday’s peak. This may result in advances towards the high of February 24th, at around 97.10, the break of which could tempt investors to aim for the 99.10 barrier, marked by the lows of February 7th and 10th.