Nike, Inc. (NKE) is the iconic maker of athletic footwear and apparel that carries the famous Swoosh logo. Nike is a component of the Dow Jones Industrial Average and is the first company on the index to report quarterly results, but its report covers the three-month period that ended November, not December.

Nike stock closed Wednesday at $63.59, up 25.1% year to date, which matches the performance of the Dow 30. The stock is in bull market territory at 26.3% above its 52-week low of $50.35 set on Oct. 12, and it set its 52-week high of $65.18 on Dec. 19, which was a daily "key reversal." A "key reversal" occurs when a stock sets a cycle high and then closes below the prior day's low.

Analysts expect Nike to post earnings per share of between 39 cents and 44 cents when it reports results after the closing bell on Dec. 21. Some analysts on Wall Street recently raised their price targets to $68 to $71 per share versus the stock's all-time intraday high of $68.19 set on Dec. 23, 2015. Traders and investors should keep in mind that, from that high, the stock crashed by 28.1% to as low as $49.01 on Nov. 2, 2016.  (See also: Nike Facing 'Challenging Dynamics’: Goldman Sachs.)

The daily chart for Nike

Daily technical chart showing the performance of Nike, Inc. (NKE) stockCourtesy of MetaStock Xenith

The daily chart for Nike shows the Fibonacci retracement levels of the 28.1% decline from $68.19 on Dec. 23, 2015, to $49.01 on Nov. 2, 2016. The stock is above the horizontal line that represents the 61.8% retracement of $60.87, which is a key level to hold on a negative reaction to earnings. The Dec. 19 "key reversal" is also an important factor to keep in mind.

The weekly chart for Nike

Weekly technical chart showing the performance of Nike, Inc. (NKE) stockCourtesy of MetaStock Xenith

The weekly chart for Nike is positive but overbought, with the stock above its five-week modified moving average of $60.09. The stock is well above its 200-week simple moving average at $52.45 and has been above this "reversion to the mean" since the week of Oct. 20, when the average was $51.46. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 89.50 this week, up from 86.46 on Dec. 15, well above the overbought threshold of 80.00.

Given these charts and analysis, my trading strategy is to buy weakness to my monthly value level of $56.92 and to reduce holdings on strength to my semiannual risky level of $67.40. My annual pivot (or magnet) is $62.65. (For more, see: Foot Locker Stock May Rise 45% Fueled By Nike: Canaccord.)

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