Sunday, March 5, 2017

UAA Under Armour Weekly Chart; Oversold; Positive Divergence Developing; Lower Band Violation; Price Extended to the Downside

You cannot go out anywhere in public without seeing someone sporting at-leisure sportswear with the "UA" logo. The at-leisure trend over the last several years, where people go out in public wearing sporting clothes, yoga pants and sports team shirts is fading. NKE, LULU and UAA dominate the sales in the at-leisure segment. Denim is once again gaining in popularity so people must be getting sick of walking around in the sportswear-type garb especially when they are 50 pounds overweight sporting pot-belly's. There should be a law against certain people wearing spandex. 

There have been many bullish traders trying to catch the Under Armour falling knife; their hands are bloody and they have lost fingers trying to play the long side. The crash five weeks ago annihilated investors; many were carried off the exchange floor head-first on stretchers.

The weekly and daily charts are setting up with possie d (green lines) sans the MACD line. The RSI, stochastics and money flow are oversold. Price has violated the lower standard deviation band so a move back to the middle band at 28.50 and falling is in play. UAA is extended below its moving averages requiring a mean reversion higher. All these parameters are bullish except for the MACD line.

Price moves steadily through the downward-sloping blue channel for the last two years and then collapsed below the bottom rail five weeks ago. The expectation would be for UAA to bounce but the weak and bleak MACD line wants one more matching or lower price low to print on the weekly basis, thus a jog move may be in play with one week up, then one week down, then up and away (if the MACD line positively diverges to join the other green lines).

The UAA monthly chart is ugly. It is likely that on a monthly basis, lower lows will occur with price thus, any long-side recovery on the weekly basis will probably peter away after it plays out allowing more negativity to begin. The 200-week MA that was in a nice long-term uptrend is flattening and potentially rolling over which points to a sick stock for many months ahead.

The expectation would be for a bounce now in UAA but after a few days or week or so it will likely drop again down to the current lows one more time, play around there for a week, then, if the MACD line is possie d, it will be all systems go for an up move on the weekly basis for a few weeks or month or so. A reasonable expectation would be for UAA to print at 24-27 in April or May but then weaken again according to the monthly chart. Keystone has no position in Under Armour but will likely buy this week. If there is a sharp move higher, that trade may be exited, and then wait for price to come back down for the MACD line to set up properly, then go in long again and ride that move up that may last into later this month and into April.

UAA is not a long-term buy and hold it is only a trading stock and this trade is a dangerous and speculative trade. In general, Keystone will likely buy a little this week, then a little more next week, then a little more the week after that then completely exit the stock in April. It will not be surprising to see UAA pop +10% or more over the next few weeks, perhaps a lot more if a short-covering rally kicks into gear. The knife-catchers may give up which further indicates a good time to buy. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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