Shares of Under Armour Inc (NYSE:UAA, NYSE:UA) for the better part of the past two and a half years have been in a sea of pain. The big drop in UA stock over this time not only destructed much stockholder wealth but, over the past few months, also ultimately led to a severely pessimistic attitude on the part of stock holders. The stock’s price action in recent weeks and particularly following Tuesday’s earnings report now look like a bullish trade is setting up.
When Under Armour reported its latest batch of earnings on Tuesday, it beat top line expectations and also showed promising international growth. As a result US stock rallied more than 17% on the day, closing at multi-month highs and also made bullish mark through the lens of technical analysis.
Shares of Under Armour are a great recent example of why its important to have a process in place that measures trends and trend changes in different time frames and thus becoming aware of when bull or bear trends may be changing.
UA Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
Looking at U.S. stock through the bigger-picture lens, we see that as the stock began to top out in September, and October 2015 it soon broke below its yellow 50-week simple moving average.
The last time this moving average was touched was in August 2016. With Tuesday’s strong post-earnings rally UA stock is now once again pushing up against this simple moving average line.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
Although UA stock lost about 80% of its value from the 2015 peak into last year’s lows, on the daily chart we see that the stock has been making a series of higher lows since November of last year.
Tuesday’s strong post-earnings rally closed the stock above the early January highs and bumped right into the red 200-day simple moving average, which also lines up with the aforementioned 50-week moving average.
From here, barring any immediate reversal of Tuesday’s strong rally, active investors and traders could buy UA stock with the hope of it being able to clear the 200-day moving average and moving up toward a first upside target around the $18-$19 area.
Check out Anthony Mirhaydari’s Daily Market Outlook for Feb. 14.
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