The stock market has already crashed: Why a Wall Street veteran says Nike is the ultimate turnaround trade.

Veteran Wall Street strategist Larry McDonald argues that record highs for the S&P 500 can mask weakness beneath the surface, where many individual companies have seen their share prices slide even as the headline index climbs. In his view, that divergence creates room for what he calls turnaround situations—stocks that have already absorbed a great deal of bad news.

Among his examples is Nike, which he describes as the ultimate turnaround trade. The relevance for investors lies less in any single stock pick than in the broader point: index-level strength does not guarantee that every company is participating in the rally, and some may be pricing in problems already.

What to watch is whether such beaten-down names show fundamental improvement—margin recovery, inventory normalization, or steadier demand—rather than simply bouncing with the market. A turnaround thesis stands or falls on execution, not on the label.