Nike Is Struggling. Will Earnings 'Just Do It' For Investors?Nike, Inc.BATS:NKEmoomooNike NKE plans to report earnings next week at a time when the stock has been a real rollercoaster -- down some 60% since its 2021 peak, up 30% from its April low and off 10%+ from its recent August high. What does fundamental and technical analysis say could happen next? Let's see: Nike's Fundamental Analysis The athletic-goods giant plans to report fiscal Q1 results after the bell next Tuesday as CEO Elliott Hill approaches his one-year anniversary of taking the helm. Hill worked for 32 years at NKE before retiring in 2020, but management brought him back as CEO last October after a simply disastrous period under his predecessor, John Donahoe. Nike beat analysts' top- and bottom-line estimates when it reported fiscal Q4 results in June, earning $0.14 per fully diluted share on $11.1 billion of revenue. That said, sales fell 12% year over year -- the fifth straight quarter of year-over-year sales contractions. Meanwhile, fiscal Q4 EPS tumbled 86.1% from the $1.01 that Nike reported for the same 2024 period. As for the quarter NKE will report next week, Wall Street is expecting the shoe giant to unveil $0.27 of GAAP EPS on about $11 billion of revenue. That would represent another year-over-year sales contraction (about 5.3% this time), as well as a 61.5% drop in EPS from the $0.70 that NKE made in the same period last year. In fact, 11 of the 19 sell-side analysts that I can find that cover NKE have lowered their earnings estimates since the quarter began, while just four raised them. (The remaining four left things unchanged.) Nike's Technical Analysis Next, let's look at NKE's chart going back some seven months and running through Tuesday: Readers will see that Nike is at a crossroads in the chart above. First, the stock has put in a "double-top" pattern of bearish reversal with a $73 downside pivot, as marked with the red boxes above marked "Top 1" and "Top 2." The stock has already lost its 21-day Exponential Moving Average (or "EMA," marked with a green line). And in doing so, it probably lost the swing-trade crowd. Similarly, NKE has also lost its 50-day Simple Moving Average (or "SMA," denoted with a blue line). That likely forced some institutional portfolio managers to reduce their long exposure. Meanwhile, Nike is now approaching its 200-day SMA (the red line above) as the company prepares to release its next earnings report. That's where support will either show up ... or the dam could break. After all, few moving averages matter more to investment professionals than the 200-day SMA does. Readers will also see that the 21-day EMA (the green line) has crossed below a falling 50-day SMA (the blue line). That's sometimes referred to as a "mini death cross" or "swing trader's death cross," which can be a short- to medium-term bearish technical signal. Additionally, readers should also note the still-unfilled gap that Nike created in late June (marked with the small yellow oval in the chart's center). Now remember, gaps don't always fill, but they usually do at some point. In fact, a standard 61.8% Fibonacci retracement of Nike's early April/late July rally (marked with a blue rectangle in the chart's center) lines up almost precisely with a fill of that gap. This could be something to keep in the back of one's mind. Separately, Nike's Relative Strength Index (the gray line at the chart's top) is growing weaker, but isn't yet in a technically oversold state. However, the stock's daily Moving Average Convergence Divergence indicator (or "MACD," marked with black and gold lines and blue bars at the chart's bottom) is postured quite bearishly. All three of the MACD's components currently tell a cautionary tale. For example, the histogram of the 9-day EMA (the blue bars) has been below zero for about a month now. The 12-day EMA (the black line) has been running below the 26-day EMA (the gold line) for close to a month as well, with both lines below zero for about a week. All of that is short- to medium-term bearish technically. Options Option Options traders who think institutional support ultimately will show up at the 200-day line might consider a bull-put spread in this scenario. Example: -- Sell (write) one Oct 3 NKE $70 put for about $2.50. - Purchase one Oct 3 NKE $67 put for roughly $1.35. Net credit: $1.15 They would receive a $1.15 net credit along with the obligation of possibly having to purchase 100 NKE shares at $70 upon expiration the Friday after next week's earnings report. Of course, the trader's net basis would be $68.85 should that happen. But the trader has also paid for some insurance in the example above. The person will have gained the right to sell Nike shares at $67 that Friday should the trader end up eating the stock at $70. In that case, the person's maximum loss would be $1.85 -- a $3 loss on the equity trade minus the $1.15 net credit on the options spread. (Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle had no position in NKE at the time of writing this column.) This article discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Past investment performance does not indicate or guarantee future success. 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