Nike shares have moved into excessive gear, surging practically 30 p.c this 12 months to their highest degree since 2016, and Larry McDonald of the Bear Traps Report says the Dow inventory could have run too far, too quick.
The athletic attire maker has been on a tear this week, rallying practically 6 p.c and outperforming the broader retail group — the retail ETF, XRT is down about 2 p.c.
From a short-term perspective, Nike “appears like a screaming promote,” McDonald stated Thursday on CNBC’s “Trading Nation.” “Relative power index is thru the roof, and I believe shares must be offered right here.” The relative power index is often appeared to by traders as an technical indicator to find out whether or not or not a inventory has run too far, too quick.
“You are speaking about shares which are up 35 p.c since October, and also you’re additionally speaking about shares which have additionally had substantial drawdowns since 2013,” McDonald stated.
Nevertheless, not everyone seems to be pessimistic on the athletic large.
Craig Johnson, senior technical analysis analyst at Piper Jaffray, stated Nike appears poised to proceed to surge.
There’s “good momentum, good relative power,” Johnson stated Thursday on “Buying and selling Nation.”
a chart of Nike, Johnson pointed to the massive base of assist as a sign that the inventory’s latest run-up may proceed. “We simply began breaking out, and I believe you are going to see a transfer right here in Nike shares most likely again up towards $68, possibly even $70 a share,” he stated.
Johnson additionally famous that any type of shorter-term pullback in Nike must be seen as a shopping for alternative.
The corporate is scheduled to report earnings after the market shut on Thursday. Analysts polled by FactSet count on earnings of 40 cents per share on $eight.four billion in income.
Beforehand, shares of Nike rallied within the month after earnings experiences. After posting earnings on June 29 and Sept. 26, the inventory jumped 10 p.c and 6 p.c, respectively.
Learn More about FX Forex Trading