After years of watching Nike's multiyear stock decline, I am turning bullish. Yes, you heard that right.
The athleticwear company has been dogged by product missteps, weakness in China, and an overreliance on lifestyle and discounting, sending the stock down a whopping 79% from its record high in November 2021.
With the brand's enduring global power still intact and the worst of the inventory and channel reset behind it, the risk/reward from here looks meaningfully better than it has in years -- particularly as early evidence of progress is emerging under CEO Elliott Hill. From a technical standpoint, there are also early signs that the stock's collapse could finally be reaching a bottom.
Nike remains bogged down by broader headwinds within the consumer discretionary sector, which ranks as the weakest of the 11 major S&P 500 sectors so far this year, based on the State Street Consumer Discretionary Select Sector SPDR Fund's 4.5% decline year to date.
Drilling down into industry subgroups, footwear performance has been heavily bifurcated rather than uniformly weak. Outperformers like Crocs, Wolverine World Wide (think Saucony), and Steve Madden have generated strong year-to-date rallies of 46%, 13%, and 13%, respectively. Conversely, Birkenstock, Deckers Outdoor, and Nike have experienced sharp drawdowns in 2026, sliding 12%, 16%, and 40%, respectively.
Despite this group divergence, Nike presents the most compelling risk/reward situation among its peers over a 12-month horizon. To evaluate the technical foundation behind this secular bullish thesis, let's examine the weekly and monthly charts for a longer time horizon.
Looking at Nike stock's weekly chart, price action broke above its 2026 downtrend against peer Under Armour this summer on the ratio chart. The absolute chart continues to reflect long-term overhead resistance after the stock lost its 50-week simple moving average in early 2022. That key moving average has repeatedly capped recovery attempts, generating sharp rejections marked by heavy bearish engulfing weekly candlesticks in December 2023, June and October 2024, and December 2025. Each rejection resulted in declines ranging from 8% to 22% on at least double the average weekly volume.
Despite this prolonged resistance, high-volume capitulation signals indicate a long-term bottoming process is under way. During the week ending Oct. 2, Nike dropped over 5% but printed a long-legged spinning top candle -- a classic trend exhaustion signature -- on its highest weekly volume in nearly 40 years.
This historic volume spike suggests institutions -- rather than retail traders -- are accumulating the stock, laying the foundation for a structural recovery. I expect a nice turnaround story going forward, and bulls on this time frame can expect a bounce toward that 50-week SMA near the very round $50 number by mid-2027. That would mark a 35% gain from current prices, and investors can get paid a 4% dividend yield in the interim. Remain bullish above $33.75.
Nike was trading around $37.50 Friday.
Turning to the monthly chart, the stock's severe relative lag against the broader State Street SPDR S&P Retail ETF is evident dating back to late 2021. From an absolute price perspective, the all-time high was capped by a doji candle in November 2021. Subsequent recovery attempts marked by bullish candlestick patterns repeatedly failed over the following years. These included a morning star completed in August 2024, a cluster of three dojis between November 2025 and February 2026, and a harami this past July -- all occurring against a backdrop of heavy institutional selling on larger-than-normal volume since June 2024.
However, price action in October could be constructing a major structural turning point. This month, now more than half over, is shaping up to print a bullish hammer supported by historic volume. Trading activity is already tracking as the second-highest monthly volume surge since May 1997, with two full weeks of trading still remaining. This landmark volume offers asymmetric risk/reward across both weekly and monthly time frames.
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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