Retailers have crashed into bear market territory this vacation season, and one high technical analyst says Nike could possibly be the subsequent shoe to drop.
Shares of the sports activities attire retailer had been beneath stress Monday morning, extending their losses from their September highs. Carter Price, head of technical evaluation at Cornerstone Macro, says Nike might see even greater strikes to the draw back when it studies earnings later this week.
“[Nike’s] setup is very much like Costco, and that, in fact, would not be good if Nike does what Costco did [on earnings],” Price stated Friday on CNBC’s “Choices Motion.”
Regardless of the broader sell-off within the retail area, Nike shares are nonetheless up greater than 14 % this 12 months, whereas the XRT retail ETF has fallen almost 7 % in the identical time-frame. Nevertheless, Price’s thesis suggests the Dow inventory could not be capable of preserve its resilience.
“Costco and Nike have been the darlings — they’re each buying and selling at near-record valuations as most different retailers, together with even Amazon, have come beneath stress,” Price stated. “They have been handled the identical out there, and I believe [that] is likely one of the setups right here for Nike to the draw back.”
Price’s charting reveals numerous bearish technical indicators which have developed in Nike’s inventory, together with a bearish head-and-shoulders formation and a break down by way of its uptrend across the $81 stage.
Whereas Nike is up on the 12 months it is nonetheless down almost 17 % from its all-time closing excessive of $85.55 in late September. Price suggests buyers control the inventory neckline round $69 the place a break under would “provide you with a Costco-type sell-off.”
“[With] earnings developing, I am a vendor,” he warned.
Nike is about to report its second-quarter earnings Thursday. The inventory was buying and selling decrease on Monday afternoon round $71.72.