Nike Shares Sell Off on Lower Earnings Forecasts

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Nike Shares Sell Off on Lower Earnings Forecasts

Shares of Nike (NKE) marked a 3.7% loss in the latest US trading session to $76.31 after the company predicted that it would see lower than expected growth in 2015. This came after a better than expected Nike earnings report for the third quarter of 2013, showing earnings of 76 cents per share or $6.97 billion.

However, the company projects that foreign exchange risks in the near term could make an impact on overall profits and that demand might weaken in the coming months. Meanwhile, the US economy reported a rebound in manufacturing, following the negative impact of cold weather conditions on most of the US states.

The latest FOMC statement also had positive prospects for the general economy, as policymakers provided upgraded growth forecasts for the next two years. Nike, on the other hand, estimated weaker sales and lower earnings per share.

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Nike Shares Forecast

From a technical perspective, the chart of Nike shows that price is hitting a psychological barrier at the $80.00 level. The pair has tested this area earlier in the year and failed to break to the upside. Another failed test of this resistance zone could see a double top formation later on, which would be indicative of a potential selloff in the coming months if earnings forecasts remain bleak.

Share prices could dip back to the $70.00 technical level on a swing lower, which would make a neckline for a double top chart pattern. A break below this level could confirm the potential selloff, which might mean a further move down to the $60.00 mark.

On the other hand, an upside break from $80.00 could mean more gains for the pair as it would extend the ongoing uptrend, which started back in January last year. Risk flows stemming from positive economic and political news could help Nike extend its rallies to new highs.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com