UA Under Armour Monthly Chart Overbot Rising Wedge Negative Divergence

UA has had a phenomenal move off the 2009 bottom from about 3 to 75, an astounding +2400%. The chart is painting a weak picture ahead, however, so now is not the time to chase into this hot-shot darling. The cheerleaders working for hedge funds are telling retail investors to buy with both hands since they need bag holders as Under Armour tops out. The RSI and stochastics are overbot and the rising wedge pattern is in play favoring bears. The red lines clearly indicate negative divergence in play that will smack price lower. Further, price is extended far above the moving averages requiring a mean reversion lower.

Stocks experiencing a great amount of momentum are never attractive short candidates since momo begets momo but an experienced trader looking for excitement can begin to bring on a short position. It is more important that anyone that has enjoyed the long side the last few years, or even months, take profits and move on. The MACD prints neggie d as price prints a new high this month so there is no reason for price to move higher again. However, a momo stock can sometimes take a little time to top out and roll over simply due to the strength and power of the move.

The expectation would be for UA to top out anytime now and over the next month or three and roll over to the downside. The upside is limited from here on out. An initial downside target say for April-July would be the 20-week MA at 58 and rising; call it the 58-65 landing zone. If you now buy into UA on the long side or remain in Under Armour on the long side you will regret it by summer time. 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.

Note Added 8:07 PM: UA bounces +2.7% to 76.69 today. For the month of March thus far, UA is down -0.4%.