Nike Inc (NYSE: NKE) opened with a negative gap on Thursday, breaking below the psychological round figure of 130.00, which also acted as the lower boundary of the sideways range the stock had been trading within since November 16th. The share price hit support at 125.50 and rebounded, but still, it closed below the 130.00 mark. This paints a cautiously negative picture, in our view.
We believe that, even if the stock recovers a bit more, there is a decent chance for a rejection near the 130.00 zone. This could result a slide back near the 125.50 barrier, the break of which would confirm a forthcoming lower low and may set the stage for declines towards the 121.00 area, marked by the low of November 2nd, or towards the low of the day before, at around 118.60.
Taking a look at our short-term oscillators, we see that the RSI rebounded form its below-30 territory, while the MACD remains below both its zero and trigger lines. Both indicators detect downside momentum, but the fact that the RSI rebounded suggests that there might be some more recovery before the next negative leg, perhaps for the share to test the 130.00 zone as a resistance this time.
On the upside, a break back above 132.80 may confirm the stock’s return within the aforementioned range. Market participants may then get encouraged to push the price up to the 135.40 barrier, marked by the inside swing low of March 19th, the break of which may see scope for advances towards Tuesday’s peak, at 140.70, or the low of March 18th, at around 142.50.
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