NEW YORK (TheStreet) -- Nike (NKE) is one of the leaders of the pack when it comes to the 30 components of the Dow Jones Industrial Average. Last year Nike led the average with a gain of 22.3% compared with the Dow's 7.5% gain.
So far in 2015, the maker of athletic shoes, equipment and apparel is up 10.3% against the Dow's 1.1%. Nike has been a Dow leader since the end of 2013 but hasn't been able to do much to get the Dow back to where it reached an all-time intraday high of $18,351.36 set on May 19. That may change after the company reports earnings after the close Thursday.
Nike has a strong history of beating earnings estimates, which includes 11 consecutive better-than-expected quarterly results. Analysts expect Nike to earn 84 cents a share and some expect a lower earnings report, and some estimates were slightly lower at 83 cents a share. Jim Cramer cautions investors to be careful about investing in Nike given this pre-earnings strength.
Deutsche Bank raised its earnings estimate to 84 cents a share from 81 cents a share and maintained its buy rating and price target of $115 a share.
Here's the daily chart for Nike.
Nike is currently trading at $105.60, above its 2015 low of $90.69 set on Feb. 9. The stock traded back and forth around its 200-day simple moving average between April 7 and Aug. 7, 2014, as this average rose from $72.12 to $75.99. The major momentum run-up began with a price gap higher on Sept. 26 following a better-than-expected earnings report on Sept. 25. The stock is now above its 50-day and 200-day simple moving averages at $102.50 and $95.92, respectively.
Here's the weekly chart for Nike.
Courtesy of MetaStock Xenith
The weekly chart for Nike is positive but overbought with the stock above its key weekly moving average of $103.63 with its 200-week simple moving average of $68.04 as the longer-term "reversion to the mean." The projected momentum reading is 80.62 up from a reading of 77.41 on June 19.
Investors looking to buy Nike should place a good till canceled limit order to buy the stock if it drops to $87.26, which is a key level on technical charts until the end of 2015.
Investors looking to reduce holdings should place a good until canceled limit order to sell stock if it rises to $108.19, which is a key level on technical charts until the end of June.
Investors not familiar with technical analysis should begin with the notion that a price chart for a stock shows a road map of past price performance, which provides guidance for predicting future share price direction.
Here's how to read a daily chart. There are two moving averages to follow; the 50-day simple moving average is in blue while the 200-day simple moving average is in green.
Here's how to read a weekly chart. This chart shows weekly price bars going back to the beginning of 2007 and thus includes the Crash of 2008, then the current bull market for stocks that began in March 2009. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 is oversold and a reading above 80.00 is overbought.
A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.
A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.