In the early 1980s, Sonny Vaccaro helped save today's largest shoe company from extinction...

Vaccaro, a salesman at heart, worked as a consultant for Nike (NKE) at the time. And after a lot of convincing, he got the company to sign a first-of-its-kind sports marketing deal.

It featured a newcomer to the NBA... Michael Jordan. And the signature shoe they created – the Air Jordan – was a huge hit.

The deal has earned Jordan more than $1 billion over the years. And its success took Nike from a company teetering on the edge of bankruptcy to the dominant brand we know today.

The company needs another shot of success right now, though. Its shares have had a tough time in recent years. And that culminated in a collapse in recent weeks.

But according to history, you shouldn't give up on this footwear giant. Instead, today's setup is a contrarian's dream.

Nike is one of the best-known brands in the world. But the company has fallen back on hard times in recent years.

After a pandemic-induced boom, Nike's growth slowed to a crawl. Now investors want nothing to do with it.

The stock is down by more than half since the 2021 high... And things went from bad to worse when Nike reported dismal earnings late last month.

The stock plummeted 20% on the news. And that pushed it to "oversold" levels based on the relative strength index ("RSI").

The RSI shows us when prices have moved too far, too fast. When that happens, it usually means investors have gotten ahead of themselves... And soon, prices tend to snap back in the other direction.

RSI readings of 30 or below represent oversold levels – which typically mean investors are too bearish. That's what we've seen lately. Folks have sold shares of this sports brand in droves. Take a look...

Nike's recent crash triggered an oversold setup. And according to history, that's a smart time to buy the stock.

To see it, I looked at each new RSI reading of 25 or lower for Nike. These signals have only happened 24 other times since 1990. Here's what happened next...

Vacarro's genius deal with Jordan helped turn Nike into a powerhouse for investors. The stock has gone up 13.9% a year since 1990. But you can beat that return if you buy after oversold situations like we have today.

Similar setups led to 6.4% gains in three months, 12.2% gains in six months, and 19.1% gains in a year. That's a healthy improvement over the typical buy-and-hold return.

What's even more appealing is that this setup is happening in a globally dominant brand. Despite the recent woes, Nike is still the world's largest footwear company. And that's unlikely to change anytime soon.

Simply put, dominant global brands don't stay down for long. We've seen that with Nike over history... And given the current setup, this is a business worth considering today.

Good investing,

Brett Eversole