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.
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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