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Technical Update - Adidas, Puma and Nike

Technical Update - Adidas, Puma and Nike

4 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  The three big sporting gear manufactures Adidas, Nike and Puma are showing almost similar technical patterns. But with Adidas and Puma as the weakest of them.
Gapping lower this morning Adidas seem to reverse the positive sentiment experienced since New Year. Levels not seen since 2015 could be revisited

 Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team

Adidas is being beaten right at the open following disappointing earnings release. Stock is trading below back below 200 daily Moving Average and below lower rising trendline. An attempt to move back above the trendline has failed. A close above is minimum requirement to reverse the selling pressure.  
RSI has warned about a potential correction or trend reversal showing divergence. IF RSI closes below 40 it is in negative sentiment strongly indicating lower levels in Adidas.

Medium-term Adidas is in an uptrend supported by positive RSI. However, Adidas couldn’t even test the 55 weekly Moving Average which is in steep decline before it was hit by heavy selling.
A close below the lower rising trendline is likely to jeopardize the bullish scenario. Medium-term the key support is at 114.60.
If Adidas drops back below 200 monthly Moving Average there could be downside to 78 possibly lower.  Monthly RSI is negative and has so far failed to even move back above the 40 threshold. Next move down could push share price to 2015 lows around 53.
To reverse this bearish picture a close above 162.85 is needed. 
Source all charts and data: Saxo Group

Puma AG seems to be dragged won with the bad news from Adidas. Puma has at the time of writing broken below the lower trendline in the rising channel is has been trading in the past couple of months. If Puma closes below support at €59 the uptrend has reversed.
RSI is showing divergence indication a trend reversal/correction.
A close below 59 could fuel a selling pressure down to support at around 50.35

Medium-term the indicators are inconclusive. RSI is showing positive sentiment suggesting higher levels in Puma. 59 support is key.
If Puma can manage to close above 67.35 there is room to around 72.38

Nike is also showing divergence on daily RSI indicating a correction could occur. Lower rising trendline is likely to be tested but key support at around 112.35 and 102.45.

Medium-term Nike is in an uptrend supported by positive RSI and no divergence on weekly. 55 weekly Moving Average is declining but 200 MA rising. Potential up to resistance at around 139.
A likely scenario could be Nike to be range bound between 112.35 and 130 for next few weeks. 112.35 is key support for bull/bear scenario.

 

RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

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