Shares of Under Armour Inc (NYSE:UAA, NYSE:UA), after a grueling slide in recent years, saw some respite in the last few trading weeks of 2017. While the bounce was feeble, it does have some promising aspects to it that traders could take advantage of.
Retailer stocks as a group, of which UAA stock is a part, showed a nice bounce in the last few weeks of 2017 and as per my proprietary indicator have as a result turned from near-term bearish not only near term bullish but also intermediate term bullish.
Barring a major halt in this move, the path of least resistance through a multimonth lens looks to be higher and shares of Under Armour could benefit from this.
Before digging into the charts, for some perspective please keep in mind that Under Armour is scheduled to report earnings Jan. 30, i.e. in just about 3 weeks from today. As such, from a trading perspective reducing or closing any near term swing trading positions is sound risk management. Better opportunities usually present themselves on the other side of earnings reports for trying to profit from an immediate post-earnings reaction over time is a coin flip at best.
UAA Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
On the multiyear weekly chart, we see the severity of the fall of UAA stock since the autumn 2015 highs. By November of last year, the stock was trading at levels last seen in early 2013, which is to say that the drop since those 2015 highs has erased an incredible amount of market capitalization.
From this angle UAA stock remains long-term and intermediate-term bearish, no two ways about it. In other words, more patience is needed in my eye before better intermediate-term buy signals come to fruition.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the daily chart, however, we see that as a result of the late 2017 rally UAA stock managed to overcome both its 50 and 100 day simple moving averages. The stock also pushed past some multi-quarter diagonal resistance. This looks to be a promising start for a potential recovery rally in 2018.
If you would like to find out the rest of my 2018 themes, particularly the ones for the first quarter, please join the special 2018 Q1 trading and investing themes webinar on Thursday by registering here.
If UAA can establish itself above the $15 area for a little longer and particularly should it be able to hold above there following the Jan. 30 earnings report, this stock could start gyrating toward the mid to high $20s.
Check out Anthony Mirhaydari’s Daily Market Outlook for Jan. 9.
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