Charting Nike's Pullback: 'It Has To Hold $100'

Zinger Key Points
  • Co-host Dennis Dick did not hesitate with his technical take.
  • “It has to hold $100 — you are not going to see it today — but that is the level it needs to hold,” he told PreMarket Prep viewers.

Tuesdays are often the busiest day for Wall Street analysts to reveal their rating changes, and today was no exception. Unfortunately for shareholders of Nike Inc NKE, it was a downgrade from Barclays. The price action following that downgrade makes it the PreMarket Prep Stock of the Day.

Nike's Recent Price Action: Similar to the S&P 500 index, it was a bad week for the issue. After peaking last Monday at $113.36, it backed off to end the session at $112.38, The issue was hit much harder than the index, shedding $6.66 or 6% to close at $105.72 on Tuesday.

It was in the red in two of three sessions to end the week, making its low for the week on Friday ($103.25) and ending the week at $104.12.

It caught a bid with the broad market on Monday after matching Friday’s low and advanced $3.09, or 2.9%, to close at $107.21. That matched the close for its rebound in Wednesday's session.

The Ax: Before the open Tuesday, Barclays analyst Adrienne Yih downgraded Nike from Overweight to Equal-Weight and lowered the price target from $125 to $110.

That was the second downgrade of the issue in the last month. The other one came on Aug. 9 from Exane BNP Paribas, which lowered its rating on the issue from Outperform to Neutral with a $118 price target.

PreMarket Prep's Take On Nike: When the issue was being covered on the show Tuesday, it was already trading in the red by nearly $3 in the lower $104 handle.

Co-host Dennis Dick did not hesitate with his technical take.

“It has to hold $100 — you are not going to see it today — but that is the level it needs to hold.”

The author of this article alerted traders to a potential support area ahead of $100 and a pair of lows from the last two sessions at the $103.30 area. Those lows were easily breached in the first 5 minutes of the session.

NKE Price Action: After a much lower open ($103.82 vs. $107.12), Nike attempted to rally, only reaching $104.44, and then resumed its move lower.

The ensuing decline breached the pair of lows at the $103.30 area, with Nike falling to $102.25. That marks the lowest level for the issue since it bottomed on July 14 at $101.86.

The stock ultimately lost 4.46% Tuesday, closing at $102.42. 

The Nike discussion from Tuesday’s show can be found here:

Photo via Shutterstock.

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