Buy nike stock? + US market analysis

The Nike share in the technical analysis taking into account an overall market assessment. Now shorten Nike.

Free trade is the basis of prosperity

Economic liberalism and globalization have become the hate objects of a left-wing global civil movement. On closer inspection, one should not see globalization too disparagingly. The economic successes of the past 50 years are proof of freedom. Although the global population has more than doubled over time, the global population has not become impoverished, but strangely enough, the trend to emphasize the principles of socialism has been increasing for years. This is bizarre because sooner or later every centrally organized economic order produces lack of freedom and a lack of economy.

Interest rates that are too high and too low are poison for every economy

The political left verbally strikes the liberal market economy and even assigns the financial crisis in 2007/2008 to it. In fact, the seeds of the crisis were laid earlier, namely in the political attack on US key interest rates. Interest rates were cut too low due to pressure from the American government. As a result, low-income US citizens have secured high real estate loans. This then gave rise to the real estate bubble.

Economists speak of a misallocation because wrong incentives have been set. Undoubtedly, interventions in the market economy result in most bad investments and inefficiencies. For example, hunger in Africa is not a product of globalization but the result of the political hindrance to free trade. This becomes particularly clear with agricultural products from Africa. Customs prevent Africans from selling the products in Europe at a fair price. At the same time, highly subsidized European agricultural products are almost given away in Africa. As a result, it is not worthwhile to cultivate agricultural products for African farmers.

Any kind of restriction on free trade, especially customs duties, will lead to a long-term weakening of an economy. The worst case is a trade war over tariffs, in which several countries deliberately make products more expensive.

Harley-Davidson could be a protagonist

The effects of tariffs have recently been shown by Harley-Davidson's decision. Actually, Donald Trump wanted to protect jobs in the United States with his tariffs, and now Harley-Davidson will shift part of its production to South America to avoid a trade war with tariffs. As is known, Trump was furious with the Harley-Davidson announcement. However, the company's decision is highly logical. Harley-Davidson sells its motorcycles worldwide. The United States is the most important market, but it is not enough to keep Harley-Davidson alive. Harley-Davidson is one of the first examples of how companies will behave under political constraints. One can expect that other companies will make similar decisions in the near future.

3The US stock market is a leading indicator of the global economy

The US stock market is a early indicator of world growth. Whether the trade war is having an effect can be felt on the capital market. Once liquidity decreases, it will become increasingly difficult to maintain the long-term upward trend in stocks. In the past two years, technology stocks in particular have given the equity markets a constant boost. This is a good argument to take a closer look at the inner structure of the Nasdaq100 index.

A look at the structure of the US stock market

at the Advance Decline Line (ADL) the difference between the rising and falling shares is calculated. Basically, every movement of the index should be confirmed by the indicator. If there is no confirmation, this means that the majority of the shares are behaving differently.

Image: Daily chart of the Nasdaq100 index with the Advance Decline Line (100 shares)

The ADL promises a continuation of the upward trend in the coming months. A wave count according to Elliott is also included in the chart. The current upward wave should therefore move upward in five waves. Four waves have been completed and the fifth could have just started. The ADL already confirms a new price breakout. There was a relative high on June 14th, which the ADL has already surpassed. This is a clear sign of a trend increase. We can now from the Nasdaq100 index expect the all-time high of 7300 points to be exceeded in the next few days or weeks. How far the fifth wave can go cannot be predicted with the current political situation.

Buy nike stock? + US market analysis

Buy Nike stock?

The World Cup is the best stage for marketing sports products. That is why Adidas, Puma and Nike have high advertising costs. With a market share of around 45%, Nike is the leader among sneaker and sports shoe manufacturers. But it seems that supremacy is in danger.

Adidas in particular is an aggressive attacker, relying on its technology leadership. For example, "Futurecraft 4D" is a new technology for sports shoe soles. The midsole has been redesigned and offers great comfort and thus distances itself from the competition. Adidas basically does without expensive TV advertising and relies entirely on social media channels as an advertising platform. This is not only inexpensive, but also shows great success.

The sports market is growing only little

Nike has to be much more traditional and expensive. It looks like Nike hasn't progressed in recent years. The sports markets in the US and Europe are largely saturated. Growth is only possible in some areas. That is why China is a growing key market for sporting goods manufacturers. Even the Chinese government wants to establish China as a new football power. The Chinese company Anta Sports is there to help. Anta is still small compared to the established sporting goods manufacturers, but with the appropriate funding, a larger sporting goods manufacturer could soon develop.

In this context, it is easy to imagine what effect an additional duty would have on Nike products. The US-China trade war could have profound consequences. Nike is a US company but a large part of its shoe production is located in Indonesia. Lawyers can then decide whether the punitive tariffs would still be feasible.

Child labor is undesirable at Nike

An unsightly chapter must not be left out when assessing the Nike share. As a shareholder, you also buy the company's philosophy. For critical environmentalists, Nike is a company that exploits employees and allows child labor. Much of the shoe production in Indonesia is said to have been made using child labor in the past. Nike is now actively working to ensure that child labor does not occur. As an outsider, it is difficult to assess how effective the controls are, and it is undeniable that there is a tendency to exploit children, especially in poor countries. Other international companies are also affected. It is often emphasized that the products are only made by adults, and yet there is child exploitation in the "back room". The international corporations cannot uncover everything.

Financial data from Nike

years201420152016201720182019Revenues277853069632464342543639739300Results before St.354442054623488643255002KGVuelle26 million26Z1201For date, the figures so far are: Nike always increase its sales every year. However, the share could never be called cheap. If Nike had been affected by the aforementioned trade war, the future figures would have to be viewed with caution. To grow further, Nike absolutely needs China as a sales market. Should China impose tariffs accordingly, it would deal a severe blow to the company.

Initial technical situation for the Nike share

From a long-term perspective, the upward trend is undoubtedly intact. The lower chart shows a period of 14 years. The security not only rose, it even accelerated the upward trend disproportionately. Such acceleration phases occur when the popularity of the stock increases constantly. There was only a consolidation in 2016, which ended in 2017.

Image: Monthly chart of the Nike share with a strong upward trend

When analyzing an upward trend, the surge waves are particularly important, In the upper chart, the last two major increases are marked in gray. It is striking that both shafts currently have a similar length. A feature that can be important because the potential of the current wave may have been exhausted, so let's take a closer look at the last surge wave.

Image: Weekly chart of the Nike stock in US dollars

Breakout over $ 68 without power

The price wave since October can be divided into two parts. There is a blue and a red arrow in the chart for identification. The wave with the blue arrow is very strong and contains increasing trading volume. The demand for the security is clearly recognizable, and the second wave (red arrow) results from crossing the resistance at $ 68. When the breakthrough occurred, trading volume should increase and the price should accelerate. A weakness in demand can be seen: the further the price progresses, the lower the trading volume. It suggests that a price reversal would be easy to implement.

A price target would be to fall back to the former resistance level at $ 68.

Nike stock: WKN 866993 or US symbol NKE

Short-Signal:

Price target: USD 68

Intermediate target: without

Stop loss: 83 USD Dollar

Trading conversion:

If you want to benefit from the short-term stock recommendation, you can buy the stock directly or work with derivatives. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.

Trading information:

Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum Loss limitation.

Price target: The price target is the exit point for the forecast market movement.

Interim target: When the intermediate target is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.

Buy nike stock? + US market analysis

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