Nike shares have moved into high gear, surging nearly 30 percent this year to their highest level since 2016, and Larry McDonald of the Bear Traps Report says the Dow stock may have run too far, too fast.
The athletic apparel maker has been on a tear this week, rallying nearly 6 percent and outperforming the broader retail group — the retail ETF, XRT is down about 2 percent.
From a short-term perspective, Nike "looks like a screaming sell," McDonald said Thursday on CNBC's "Trading Nation." "Relative strength index is through the roof, and I think shares should be sold here." The relative strength index is usually looked to by investors as an technical indicator to determine whether or not a stock has run too far, too fast.
"You're talking about shares that are up 35 percent since October, and you're also talking about shares that have also had substantial drawdowns since 2013," McDonald said.
However, not everyone is pessimistic on the athletic giant.
Craig Johnson, senior technical research analyst at Piper Jaffray, said Nike looks poised to continue to surge.
There's "good momentum, good relative strength," Johnson said Thursday on "Trading Nation."
Looking at a chart of Nike, Johnson pointed to the big base of support as an indication that the stock's recent run-up could continue. "We just started breaking out, and I think you're going to see a move here in Nike shares probably back up toward $68, maybe even $70 a share," he said.
Johnson also noted that any form of shorter-term pullback in Nike should be seen as a buying opportunity.
The company is scheduled to report earnings after the market close on Thursday. Analysts polled by FactSet expect earnings of 40 cents per share on $8.4 billion in revenue.
Previously, shares of Nike rallied in the month after earnings reports. After posting earnings on June 29 and Sept. 26, the stock jumped 10 percent and 6 percent, respectively.