Looking for the Next Nike
It seems like Nike(NKE) has been in the financial news a great deal this week. It's a hot topic and a hot company with plenty of opinions about its future swirling like water spouts.
First, let me encourage anyone interested in the company as an investment or trading theme to first familiarize yourself with the company's earnings report and forward guidance. You can start by going directly to Nike's website.
Nike has become the world's leading innovator of athletic footwear, apparel, equipment, and accessory products for men, women, and children.
Many of us think we know what NKE manufactures and sells to the world. But did you know the company sells performance equipment, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities?
It also makes and markets various plastic products to other manufacturers. Since branding and name recognition is such an important aspect of retailing, there's inestimable value in the names it owns and retails.
It offers products under the trademarks of Cole Haan, Converse, Chuck Taylor, All Star, One Star, Star Chevron, Jack Purcell, Hurley, and Umbro. NKE is a star purveyor that sells its products through retail accounts, its own retail stores and Internet sales, independent distributors, and licensees.
On Thursday the stock was trading under its key support level of $100 per share. Towards the close of the trading session its intra-day low was $98.53.
Take a look at the 12-month chart below to see where the next key support level is and where the bottom Bollinger Band is situated. From a technical standpoint that will be the price level to watch.
Notice the share price is below both the 100-day and the 200-day moving averages. This, according to many technical analysts, is a foreboding phenomenon that NKE shares have not experienced since October 2011. Is this a big red flag or just the approach of a good buying point?
As you can also see, each and every time in the past 12-months the stock dipped below both moving averages it rebounded higher (like a Michael Jordan dunk shot during a Nike commercial).