Since dropping into the Red Unfavored Zone of the SIA S&P 500 Index Report back in January, athletic clothing and footwear maker Nike (NKE) has plunged 31.6%. This includes a 7.0% loss yesterday that sent NKE down another 11 positions to 443rd place.
For the first half of this year, Nike (NKE) shares have been consistently under distribution, steadily sliding in an Falling Channel of lower highs and lower lows with bounces being contained near the 50-day moving average, which suggests current resistance near $116.00.
The shares have dropped to test $100.00, a big round number and a previous breakout point. If support were to come in here, it could be a sign of a bottom starting to form, but if support fails, the shares could have significant additional downside. Based on previous highs and lows, next potential support on a breakdown could appear near $92.50 then $82.50.
Since peaking back in December, Nike (NKE) shares have been under distribution, first selling off in the winter, staging a short symmetrical triangle pause, then breaking down in May. This month the shares have continued to steadily decline in a downward trend of lower highs and lower lows, recently completing two more Double Bottom breakdowns.
The shares have now reached a potentially key technical test. Between a previous breakout point and a big round number, the $100.00 to $100.90 zone has emerged as an area where the decline could potentially be contained. Should that occur, initial bounce resistance may appear near $111.40 based on a 3-box reversal.
On the other hand, if support fails here and the shares close below $100.00, it would confirm that distribution continues with next potential downside support near $93.20, $86.10 or $82.75 on trend based on horizontal and vertical counts.
With a bearish SMAX score of 1, NKE is exhibiting weakness against the asset classes.
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