Under Armour, Inc. (UAA) has chart setups that favor a positive reaction to earnings when the sportswear retailer reports results before the opening bell on Tuesday, Feb. 12. The stock closed Wednesday, Feb. 6 at $20.72, up 17.3% so far in 2019 and up by a bull market 25.3% from its Dec. 26 low of $16.53. Dec. 26 proved to be a "key reversal" day when the daily close was above the Dec. 24 high.
Looking longer term, Under Armour stock set its 2018 high of $24.96 on Dec. 3 and is down 17% since then. The retailer's shares set an all-time high of $54.70 during the week of Sept. 18, 2015. The stock plunged by a bear market 79% to a multi-year low of $11.40 during the week of Nov. 10, 2017, and has been attempting to recover from this slump since then. The weekly chart below shows the Fibonacci retracement levels of this decline.
Under Armour is a stock for traders not investors, as the P/E ratio is 122.94 and the company does not pay a dividend, according to Macrotrends. The athletic apparel and footwear market is said to be $280 billion annually, and Under Armour wants to grow its share from the current estimate of 33%. Targeting both athletic wear and leisure wear using websites and advertising around the world is the key to growth.
The daily chart for Under Armour
The daily chart for Under Armour shows how the stock was looking good until peaking at $24.96 on Dec. 3. This upside resulted from a solid earnings beat and price gap higher on Oct. 30. The stock plunged to as low as $16.53 on Dec. 26, which was a "key reversal" day, as shown on the chart.
The close of $17.67 on Dec. 31 was the input to my proprietary analytics resulting in the horizontal line on the chart at $20.02, which is my semiannual pivot. The close of $20.74 on Jan. 31 resulted in a monthly risky level at $21.16. My annual risky level is above the chart at $37.34.
The weekly chart for Under Armour
The weekly chart for Under Armour has been positive since the week of Jan. 11, with the stock now above its five-week modified moving average of $20.30. The stock is below its 200-week simple moving average, or "reversion to the mean," at $29.32. The 12 x 3 x 3 weekly slow stochastic reading is expected to rise to 44.81 this week, up from 41.08 on Feb. 1.
The horizontal lines are the Fibonacci retracement levels from the September 2015 high of $54.70 to the November 2017 low of $11.40. The stock is positioned just above its 23.6% retracement at $21.62. The 38.2%, 50% and 61.8% retracements are $27.94, $33.05 and $38.16, respectively. The 61.8% retracement lines up with my annual risky level at $37.34.
Trading Strategy: Buy Under Armour shares on weakness to my semiannual pivot at $20.02 and reduce holdings on strength to my annual risky level of $37.34. A breakout above my monthly pivot at $21.16 would keep the solid upward momentum on track.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.