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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: Scott H. Davis who wrote (332)	2/22/1998 2:57:00 AM
From: HeyRainier	Respond to of 1720

[ NKE ] Scott, Nike seems to be a mixed bag. While the short term looks nice, I can't quite place the reasons why I currently don't like it. It must be something in my nervous system that has seen the current characteristics from prior charts that did not successfully break out from the current situation. Maybe I can try: I've seen run-ups occur on many occasions where the short term peak reaches within close proximity of a downtrending Trendline. That is what happened to NKE, only it fell much shorter than the expected distance. Other resistance lines coming from the Speed Lines show that NKE has followed the Speed/Resistance Fan quite well: downside penetrations have led to further declines, and upside moves have been halted at precise resistance points. It reached such a resistance point on 2/18/98, and failed to breakout. On the positive side, the short term trend-following indicators are in bullish territory: MACD, O.R. Expert Analyst, RSI (though RSI is coming close to historical resistance levels). Stochastics are also in bullish territory, though the distance between the Slow K and the D are narrowing. Firmer support looks to be at around mid-39. I would like it better if it "squeezed" itself positively out of the descending wedge that I currently see on the issue. This will give the "coil" more spring upon a breakout. Having it run up to a resistance line leaves it exhausted with a greater chance for failure to continue the run-up. Also, on a fundamental note, I'm not too bullish on the sneaker industry. Prices are continuing to fall, and Michael Jordan is going to retire (hope you have the basketball cards). For the industry: I am seeing some short term bullishness here, and some longer term bottoming signs, but I think it will take a few more months before the ball completely changes hands from Bear to Bull. You might want to ask Dave Horne for some of his insights in the price/volume characteristics of the group (look at Reebok(RBK), Fila(FLH), Sports Authority(TSA), Finish Line(FINL), and Nike(NKE)) as he seems to be developing some indicators that could prove insightful on the unfolding battle between Bull and Bear. Regards, Rainier