After a short correction last week, Nike (NKE) reversed course this week and charged upward, nearly reaching new, all-time highs. With such positive price action, what could be wrong? For one thing, on the monthly chart we can see that NKE is in a parabolic up move, and price is nearly vertical. Parabolics usually end in tears when price finally collapses, but, of course, there is no way of knowing exactly when that will happen.
On the weekly chart the PMO is very overbought.
On the daily chart we can see that, while the October top exceeded the August top, OBV failed to confirm the higher price top, which is a problem. The PMO bottomed, but it wasn't really an oversold bottom.
CONCLUSION: There are a lot of things to like about Nike, but monthly and weekly PMOs are very overbought. There are also some other negative technical issues about which to be concerned. The parabolic implies that there is probably not much time remaining in the long-term price advance, but that doesn't mean that we have seen the final price top. The OBV non-confirmation is another problem, as it casts doubt on the idea that prices will go higher. I am by no means trying to call a top, but I do get concerned whenever I see a parabolic. Parabolics usually collapse and don't leave much time to get out of the exit.
Technical analysis is a windsock, not a crystal ball.
