• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Nike Stock: Three Rising Valleys and Running
Stock

Nike Stock: Three Rising Valleys and Running

by April 17, 2023
by April 17, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

If you plan on running up that hill, a pair of Nikes (NKE) could be the right fit for the task. But now, Nike is tackling a similar scenario, running up a Three Rising Valleys pattern—three consecutive higher lows (more on that later). Does the company have enough momentum to get beyond the current technical hurdle and once again reach its November 2021 peak — $179.10 per share — from the prevailing $125 price range? (See chart of NKE below.)

What’s the Fundamental Story?

Nike has beaten analyst earnings expectations over the last 12 consecutive quarters. Its last drop, a negative earnings surprise, occurred in its fiscal Q4 2020 quarter—a massive 38% drop (loss of $790 million) during the global Covid-19 lockdown.

It’s been recovering since, though sales to its third largest market, China, remain soft. Its last reported earnings report on March 21 was pretty outstanding. Nike did really well in their third fiscal quarter of 2023 compared to what financial experts on Wall Street predicted. Earnings per share and revenue came in higher than analyst estimates.

How’s the Road Looking Ahead?

The road to recovery in China still has a few hurdles, but Nike CEO John Donahoe expects things to improve. As for global sales, Nike saw double-digit growth in the US, Latin America, Europe, Africa, Asia-Pacific, and the Middle East.

Also, Nike has really been putting a lot of work into growing their direct-to-consumer sales. They’ve been pouring money into cool experiential stores, working on their loyalty program, and increasing their e-commerce sales. It’s been costly, but sales have accelerated as a result.

Running With the Bulls 

On the technical side, Nike formed a Three Rising Valleys formation.

Popularized by technical analyst Thomas Bulkowski, Three Rising Valleys is a bullish chart pattern that signals a potential upward trend in the market. The pattern consists of three consecutive valleys (or troughs) that form within an existing uptrend. Each valley is slightly higher than the previous one, suggesting that buying interest is increasing, and the price is likely to continue rising.

CHART 1: NIKE STOCK’S THREE RISING VALLEYS PATTERN. The stock could move as high as the 100% measured move target, which is around $136 (red dashed line).Chart source: StockChartsACP. For educational purposes only.

How Do You Trade NKE Stock?

With this pattern, you’d take an altered measured approach (according to the description in Bulkowski’s book Encyclopedia of Chart Patterns).

Entry point

You would enter a long position at [A], a breakout above the top of the formation.For early entries, a breakout above the green line at [B] would also work.

Price targets

As far as price targets are concerned, here’s how you’d calculate it. Start by subtracting the top of the formation (126.06) from the bottom (115.79), then add the difference (10.27) to the top. The targets will thus vary based on the 100% measure of 136.33 (or just 136 to round off). You can see where that level is on the chart (see red dashed line). Stop losses are usually placed at the bottom of the formation.

Note: Traders’ target price preferences will vary anywhere from 60% to 100% of the target. 

Looking at other technical indicators to contextualize this formation, the 50-day simple moving average (SMA) crossed the 200-day SMA a few months back, forming a Golden Cross. We also see the Moving Average Convergence/Divergence (MACD) looking favorable, with the MACD line having crossed above the signal line, and both crossing above the zero line.

But there’s also a drop in volume. Price has pulled back, but volume has also dwindled. If price breaks above the formation, look at volume to assess Nike’s momentum.

This pattern generally has a low failure rate (instances where it doesn’t yield a rally of a specific magnitude, such as five or 10 percent). However, there are occasions when the pattern doesn’t generate the anticipated rally. So it may be worth incorporating other indicators to confirm the upward move before entering the trade.

The Bottom Line

So overall, Nike’s stock is showing some favorable prospects, beating earnings expectations as it continues to focus on growing its direct-to-consumer sales. While there are challenges in China, Nike’s global sales look promising. The Three Rising Valleys pattern suggests a potential upward trend, but keep an eye on volume and other indicators to confirm it. If it runs bullish, monitor its progress and momentum. Remember, trading is about engaging risk; so stay alert and manage your trade as needed.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

You Might Also Like
  • How to Trade Big Earnings Gaps
  • Week Ahead: NIFTY May Continue Staying Volatile; Focus On These Levels
  • DP Trading Room: Carl’s Grab Bag! – Chipotle (CMG), NVDA, Bahnsen & Hussman
  • Top Ten Charts to Watch for November 2024
Share
0
FacebookTwitterPinterestWhatsapp

previous post
The Halftime Show: It’s NOT What the Fed Does That Matters
next post
Is the Transportation Sector Starting to Lead?

You may also like

Three ROCs can be Better than One

May 12, 2023

Not All Price Gaps Are the Same! Here’s How to...

May 20, 2025

Homebuilder Stocks are Soaring, But Is It a Good Time...

June 22, 2023

Bitcoin Halving Could Bring Massive Upside!

April 17, 2024

GNG TV: Active vs. Passive Investing

January 19, 2024

Percent Scale PnF Technique. Nvidia Case Study.

September 10, 2023

Docusign Stock: Does It Look Promising, or Still Iffy?

June 1, 2023

Sprouts Farmers Market: A Hidden Gem on the Corner of...

January 4, 2024

Consumer Discretionary New IT BULLISH Bias

August 16, 2024

Would You Rather Own AMZN or AAPL Stock?

March 5, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025
    • How I Triple My Returns With 3x Leveraged ETFs!

      July 10, 2025
    • Want Faster, Lower Risk Trades? Use This Setup

      July 9, 2025
    • The Seasonality Trend Driving XLK and XLI to New Highs

      July 9, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,630 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,919 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,607 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,576 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,449 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,169)
    • Investing (538)
    • Stock (2,661)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025
    • How I Triple My Returns With 3x Leveraged ETFs!

      July 10, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,169)
    • Investing (538)
    • Stock (2,661)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    The Five Ratios ALL Investors Should...

    August 25, 2023

    Three Signs of the Bear and...

    February 19, 2025

    The Best Five Sectors (1)

    January 3, 2025
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here