Nike (NKE) is due to report earnings today after the close, and investors must assess whether the new CEO’s turnaround efforts to revitalize the struggling sportswear giant are starting to gain some traction. Analyst estimates for earnings-per-share come in at $0.12 vs. $1.01 one year ago, while revenue estimates are for $10.69B compared to $12.61B year-over-year.

Nike shares are down about -66% since the all-time highs of 179.10 in November, 2021, as the company faced declining sales and the dismissal of its former CEO. However, the current CEO Elliott Hill in December announced a turnaround plan for the company that aimed to bring the company back to its roots by emphasizing its focus on sports, renewing product innovation, and ramping up athlete-focused marketing efforts. Hill has spent over 30 years at Nike and came out of retirement for the job.

With the shares down nearly 20% this year, the bar is low going into earnings tonight. The Option market is pricing in a +/- 7% move in the shares post results with the IV% rank of just over 50% level.

The technical picture for Nike has improved somewhat since shares bottomed out at 52.28 in April, which marked their lowest level since late 2017. Price is up about +16% from that point, but the rally has slowed during the past couple of weeks. The upward-sloping trendline beginning off those lows has been broken, with price drifting sideways in a range between about 59 and 64.

The bulls’ failure to break above 64 is noteworthy, as this is the opening of a large gap down during the tariff news flow that roiled markets. So, now the gap has been filled, but price was unable to crack this key level, so this remains an important upside area to watch.

Momentum indicators such as the Relative Strength Index (RSI) correspond with this more sideways price activity, with the RSI trending downward since September of last year and showing bearish divergence as price made a run for the 64 level. Momentum commonly slows as a stock approaches earnings, which is also exhibited by common moving averages (such as 21-day and 63-day Exponential Moving Averages) trending sideways and clustering together.

If earnings prove to be an upside catalyst, the next hurdle after the 64 level is around 69. This area marks an old low point from February and then a high point after last quarter’s earnings gap down. To the downside, look for support near 59 as it marks a series of old highs that since became support, and then the yearly lows of 52.28.

A 10-year Volume Profile study shows the area near 58 is also important, as this represents the long-term Point of Control, the area of heaviest trading. After falling below that point and remaining near those lows around 52 for several weeks, price has recovered and for now seems to be hanging on above this key level.

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