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Nike could surge back to records within a month, trader says

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Nike could return to records within a month, trader says

Nike is bouncing back after a rough month.

The stock has risen 4% this week, the second best performer in the Dow, after crumbling to a low in early August.

Todd Gordon, founder of TradingAnalysis.com, said its longer-term upward move should resume from here.

"In the recent bout of market volatility, we've seen a little bit of a consolidation, and being that Nike gave up $10 at the most, I take that as a sign of relative strength within a pretty bumpy summer market here in 2019," Gordon said Tuesday on CNBC's "Trading Nation." "If the broader market stabilizes, I do think Nike will be able to push higher out of this range."

At the worst of its sell-off this month, Nike was down 13% from an all-time high set in April.

Gordon now sees a technical pattern forming in the charts that supports a move back to records.

"We are in an Elliott triangle, which is simply a series of lower highs and higher lows that produces indecision between buyers and sellers. Usually the group that was in control prior to the consolidation will emerge victorious, resulting in a continuation of the uptrend," Gordon said. "Nike looks very good here to continue through the upside resistance, which is just about $90."

He said Nike could rally up to that level by earnings on Sept. 24. Nike would need to rally 8% to regain that record high of $90. It was trading around $83.50 midday Wednesday.

Gordon is using a call spread to take advantage of a potential move higher. He is buying an 85 call with September 27 expiration, and selling the 90 call.

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