Nike Stock Rises but Fades. Here's the Key Area on the Chart.

Shares of Nike  (NKE) – Get NIKE, Inc. Class B Report are up 3% on Tuesday following its earnings report.

The company delivered an earnings and revenue beat, even though the former declined 3.3% year over year and the latter grew less than 5%. But the figures were better than feared as supply-chain issues continued to wreak havoc for many businesses.

Direct sales climbed 17%, surely giving bulls a confidence boost when bidding the shares higher. But the bulls may also be a bit disappointed with the move — particularly with the overall market moving notably higher on the day.

High-quality retailers — like Target  (TGT) – Get Target Corporation Report and Costco  (COST) – Get Costco Wholesale Corporation Report — have been reacting well to earnings so far, but Nike is in a bit more of a gray area. It’s both a retail and an apparel business.

That’s one reason the bulls continue to cheer its direct-to-consumer sales, which widen its margins. 

Even after the stock’s 12% rally off last week’s low, bulls are surely a bit disappointed with the action. They shouldn’t, however, be surprised.

Trading Nike Stock

Daily chart of Nike stock.

Chart courtesy of TrendSpider.com

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I say that because Nike is rallying right into a key area on the chart: $139.50.

This was a support area that failed in late February, as Nike stock really began to roll over.

Now that the stock is back on the upswing, it’s no surprise that what was support is now acting as resistance. Furthermore, the bulls had to contend with the declining 10-week and 50-day moving averages.

Put it all together and there were simply too many key areas for Nike stock to reclaim. From here, it will be interesting to see how it trades.

If it can push through today’s high and reclaim these key levels and measures, then we could see a push into the mid-$140s. Above that opens the door to the 50-week moving average near $150, then the 200-day.

On the downside, keep an eye on $132.31, which is the post-earnings gap fill. If Nike pulls back and fills the gap, I believe we may need to also keep our eye on the 10-day and 21-day moving averages, which were active support before last week’s rally.

Nike stock has made a powerful and noteworthy rally over the past few days. Now we have a better-than-feared earnings report to work with as well. 

At this point, it would be most constructive to hold the 10-day and 21-day and for the stock to become more constructive on the long side. 

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