By Doug Busch
Footwear stocks keep stubbing their toe, and a sustained recovery remains elusive. Year to date, the group has lagged the consumer discretionary sector, outperforming little beyond the struggling gaming cohort.
There are pockets of resilience, with Crocs and On Holding AG attempting comebacks, but former category leader Nike has clearly lost its footing. Nike still trades nearly 50% below its 52-week high from last summer. The stock has dropped after eight of the last 10 earnings reports.
The downtrend may not fully run its course until the possibility of a removal from the Dow Jones Industrial Average comes into focus. That's not an aggressive call. Nike is now the lowest-priced component in the price-weighted Dow after Verizon's well received earnings reaction. That increases the likelihood that the index committee could eventually make a change.
Paradoxically, such an outcome wouldn't necessarily be negative for Nike stock. History offers a useful guide: Intel's removal in 2024 coincided closely with a durable bottom, while Exxon Mobil's exit in 2020 preceded the start of a powerful, multiyear uptrend. In that sense, forced index removal can act as a final capitulation event rather than a fundamental indictment.
Looking at Nike's weekly chart, one notices the downtrend is nothing new. Over the two year time frame one can see the distribution near the very round $100 number in the summer 2024, and significant down weeks have been accompanied by outsized volume since then:
Nike has been in a consistent downtrend on the ratio chart against the State Street SPDR S&P Retail ETF. Most concerning is the lack of bulls appearing after the first week of April, which produced a 14% decline on the strongest weekly trade in nearly 30 years. Additionally it has failed to move upward following a bullish engulfing candle three weeks ago.
The stock has broken decisively below a bearish head and shoulders formation and I think this can reach the mid $30s sometime in the second half. Nike was trading around $44.50 Friday.
Looking at the monthly chart over the last decade one can see the decline really started with the bearish evening star pattern completed in September 2021:
That was followed by a doji candle, which signals trend changes, in November 2021. In August 2024, a bullish morning star failed to boost the stock. More recent doji candles, in November, December, and February, didn't help either. Note that these happened as the price undercut the secular 200-month simple moving average. April recorded a very rare monthly gap down, the only one of the last 10 years, and it sliced right through the round $50 number which had been supportive in 2016-17.
Nike could have a dead cat bounce and perhaps fill in that gap, but look for this to grind lower into the $30 range later this year. Tim Cook may need to channel some patience here with his recent insider purchase as this could turn into more of an averaging-down story than a perfectly timed entry.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
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May 01, 2026 10:58 ET (14:58 GMT)
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