NKE Nike Inc.

This stock came to my attention while reading Prechter’s latest Financial Forecast, so the idea is his, not mine. However, he believes it is a short for cultural reasons, I prefer looking at it from a pure EW perspective. Here is the Yahoo chart, long term;

NKE big dec 2011

My kids were growing up, that is they were teenagers around the time this chart started’. I found it difficult to understand why a pair of gym shoes should cost a king’s ransom in those days and things have probable gotten a lot worse since then. Anyway, as one can readily see the chart easily subdivides into a very acceptable 5 wave sequence up. In fact the stock is content to stay within this 20 year channel for the entire time except the last year. Perhaps more gym shoes are sold when people want to run away from a falling apart. Whatever the case this is a perfectly normal occurrence a.k.a a throw-over, sort of the last breath if you wish.

On top of that this stock is excellent example of the Mount Everest effect, much like Colgate Palmolive CL that just will not budge from the top. The top , of course , is the 100 dollar mark that attracts investors like bees to honey. Of course once the top is reached, the stock typically will fall back to wave 4 of previous degree and erase about 62% of its value. Conveniently both are at $40 give or take a dollar. Short term charts more or less corroborate this outlook.

NKE  s dec 2011

This chart covers the entire 3 year long 5th wave. I have not put a count on it as I am not sure how it begins, only how it ends. There is either a wedge (blue) or a triangle with a thrust (red).Notice also that wave 5 is approaching the length of wave 3 (in vertical terms), mostly wave 3 is the longest so that may be a critical point. All three target $100 to $105 so basically you have 3 to 8 dollars up and 60 dollars down, at least in EW terms. If so inclined, options may be the best way to approach this.