Apparel and accessories retailer American Eagle Outfitters, Inc. (AEO) has been consolidating a bear market decline of 43% from its Aug. 22 high of $29.89 to its Dec. 24 low of $17.00. The stock closed Tuesday, March 5, at $20.43, up 5.7% so far in 2019 and up a bull market rise of 20.2% since trading at its Dec. 24 low. Even so, the stock remains in bear market territory at 31.6% below its Aug. 22 high.

The retailer sells apparel and accessories to both men and women, as well as personal care products for women. American Eagle's body-friendly Aerie brand is taking market share from Victoria Secret.

Analysts expect American Eagle to post earnings per share (EPS) of 42 cents when it reports results after the closing bell on Wednesday, Feb. 6. The retailer reported better-than-expected EPS for three consecutive quarters. Wall Street is looking for a year-over-year decline in revenue, so guidance will be important. Guidance will include American Eagle's digital channel and same-store sales, including foot traffic. The retailer's stock is reasonably priced with a P/E ratio of 13.40 and a dividend yield of 2.76%, according to Macrotrends.

The daily chart for American Eagle

Daily technical chart showing the share price performance of American Eagle Outfitters, Inc. (AEO)
Refinitiv Xenith

The daily chart for America Eagle shows the bear market decline from the Aug. 22 high to the Dec. 24 low. Note the price gap lower on Aug. 29 on a negative reaction to earnings. The earnings report on Dec. 11 was a factor leading to the Dec. 24 low.

The close of $19.33 on Dec. 26 was an important input to my proprietary analytics, which resulted in my annual value level of $19.19 and my semiannual and quarterly pivots at $20.92 and $21.68, respectively. The close of $20.40 on Feb. 28 was the latest input to my analytics and resulted in my monthly pivot at $21.46. The stock is below its 200-day simple moving average at $22.54.

The weekly chart for American Eagle

Weekly technical chart showing the share price performance of American Eagle Outfitters, Inc. (AEO)
Refinitiv XENITH

The weekly chart for American Eagle is positive, with the stock above its five-week modified moving average of $20.50 and above its 200-week simple moving average, or "reversion to the mean," at $17.28. Note how the stock could have been bought at its "reversion to the mean" at $17.08 at the end of 2018. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week rising to 67.97, up from 64.96 on March 1.

Trading Strategy: Buy American Eagle shares on weakness to my annual value level at $19.19 and to the 200-week simple moving average at $17.28, and reduce holdings on strength to the 200-day simple moving average at $22.54. My semiannual, monthly and quarterly pivots are $20.92, $21.46 and $21.69, respectively.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.