The share price of Under Armour (UA) has been under pressure since September of last year. Is a turnaround under way? Or do the bears have some unfinished business? Let's check in with the charts, which are giving us some mixed signals.
John Bollinger, CFA, CMT, my colleague and friend on the West Coast, often counsels investors that technical analysis is more like a wind sock at an airport rather than a crystal ball that sees everything. We (technicians) cannot really call every jiggle and turn but we should be able to tell you which way the wind is blowing. Looking at this daily chart of UA, above, I am getting mixed signals about which direction UA is heading. Prices and the On-Balance-Volume (OBV) line peaked in September/October. Prices are below the declining 50-day and 200-day moving averages. The OBV line is still pointed down, but prices are holding above the January low. Also, volume has been relatively heavy in the past two months or so. This heavy volume with prices not breaking to new lows can sometimes suggest we are seeing a shift from weak hands (sellers) to strong hands (buyers).
In this three-year weekly chart of UA, above, we can see that prices are below the declining 40-week average line. The weekly OBV line has been bearish since September 2015. The Moving Average Convergence Divergence (MACD) oscillator is bearish below the zero line. However, if UA can make a weekly close above $40 it will strength the picture. A weekly close below $35 will keep the bears in control.