Nike is set to report quarterly results after the bell, and the setup heading into that event is one of the weakest the stock has faced in years. Investors are looking for adjusted earnings of 11 cents per share and sales of more than $10.8 billion. The widely anticipated turnaround has yet to materialize: shares hit a fresh 52-week low on Friday and have dropped more than 40% year-over-year. The stock now sits near 12-year lows, and there is little on the chart that suggests momentum is building in its favor.
A 15-Year View: A Precarious Position
Stepping back to a 15-year chart broken into weekly increments reveals just how dicey the situation has become — and it underscores that this is not merely a tough year but a tough couple of decades for the name.
Two structural levels frame the current risk. There is a series of old highs that come in right around 40, which is roughly where the stock finds itself right now — meaning a level that once acted as resistance is now the zone the stock is testing from above. At the same time, the stock has recently broken down through a series of repeated lows near 51. Sitting on top of old highs while having already sliced through prior support leaves the stock in a genuinely precarious spot.
The relative performance picture is just as poor. Nike is significantly underperforming not only the consumer discretionary ETF (XLY) but also the S&P 500, to the tune of minus 41.6%. It ranks among the weaker players in its space generally.
Sector Headwinds: Trade and Tariffs
Part of the difficulty is industry-wide. It has been a complicated stretch for the apparel industry because of the trade war. Roughly 95% of the United States' clothing and apparel is produced outside the country, so any change to that landscape — particularly around tariffs — becomes a very tricky situation for all of these companies to navigate. That structural exposure adds a layer of macro risk on top of Nike's own challenges.
The Near-Term Technical Damage
Looking specifically at Nike's recent action, the stock has fallen through a supportive area that had been established roughly between 40–41 and 42. That zone served as the floor of a rangebound period, with a ceiling near 47. Price has now pushed below that floor to the downside.
A downward-sloping white trend line looked as though it was being broken today, but the move was soft — nothing to write home about as the stock heads into the earnings event. In other words, the apparent trend-line break carries little conviction.
The supporting studies reinforce the bearish read:
- Moving averages are trending lower, with no real signs of a potential trend change despite the trend-line breakout. The 5-day weekly EMA (shown in dark blue) is the closest, coming in near 41.70. The monthly 21-day EMA (in teal) sits near 43.30.
- RSI, the measure of momentum, is not the greatest indicator heading into earnings because of the known event-risk situation — momentum often trails off ahead of such events. RSI remains on the more bearish side of the camp, below the 50 midline, and it produced a corresponding breakout alongside price falling below the trend line.
- Volume profile shows the stock has given up a key volume area, the range between roughly 42.50 and 45.50. That range also contains the point of control — the heaviest trading area of all — near 44.26. Surrendering that high-volume zone is another mark against the bulls.
Taken together, the technicals do not shape up to support any kind of bullish outlook.
Question: What trends stand out on the chart?
The dominant trend is unambiguously bearish. The stock has broken below a multi-year support band, is trading near old highs around 40, has cut through repeated lows near 51, is underperforming both its sector and the broad market by more than 41%, has falling moving averages, bearish sub-50 momentum, and has abandoned its key high-volume trading zone. There is, in short, no technical signal pointing to a trend change.
Question: What approach would you take for an example trade?
Given the weakness, the natural question is whether the "other shoe is about to drop" — a pun fitting for a footwear company — which argues for a bearish trade.
The structure proposed is a long put butterfly built around the August expiration. Looking out roughly another quarter to that August expiry, the options market's expected move is about plus or minus 14.7%, with 40 serving as the breakdown point.
The specific trade is:
- Plus one August 21st 40 / 35 / 32½ put butterfly at a $1.25 debit.
- Max loss: the $1.25 debit paid.
- Break even: 38.75.
- Max profit: $3.75.
Unlike a conventional butterfly, the strikes here are not equidistant. The structure involves selling two of the middle (35) strikes. This creates a flat region: if price falls below the protective long strike at the bottom, the position still keeps a $1.25 profit. The "sweet spot" — the maximum payoff — occurs at the two short strikes.
The intent of the trade is to position for continued downside while sidestepping a classic pitfall of the butterfly, namely a winning position turning back into a loser if the underlying overshoots. The skewed-strike design preserves a profit even on a deep move lower, making it a measured way to express a bearish thesis into an uncertain, event-driven catalyst.
Bottom Line
Nike enters its earnings report with no technical tailwinds: 12-year lows, broken support, falling averages, weak momentum, sector tariff exposure, and severe underperformance versus both its peers and the market. The example trade reflects that backdrop — a bearish, defined-risk long put butterfly engineered to profit from further weakness while protecting against the typical butterfly trap of giving back gains on an outsized move. Results are due after the close of trading.
