Under Armour (UAA) is down sharply in premarket trading Tuesday continuing the downtrend that has been in place since the middle of 2015. Prices have reached and even exceeded a Point and Figure price target but that is not a good enough reason to attempt a trade from the long side. Let's review our charts and indicators for any guidance.
In this daily bar chart of UAA, below, we can see that prices have spent a large part of the past 12 months below the declining 50-day simple moving average line. UAA is, of course, below the declining 200-day line and a minor bounce in June was the only time prices approached the underside of the 200-day line.
The On-Balance-Volume (OBV) line has been in a downtrend the past year and tells us that even at these price levels that sellers of UAA have been more aggressive. In the bottom panel is the 12-day momentum study which shows a small bullish divergence between the lower lows in price and momentum. This divergence has not foreshadowed a bottom yet.
In this weekly bar chart of UAA, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line has been trending lower since the middle of 2015 telling us that there has been a long and significant period of liquidation. In the lower panel is the 12-week momentum study, which shows that momentum has slowed from early 2017 until September/October. This bullish divergence could develop into a low in the weeks ahead but momentum is not a precise indicator.
In this Point and Figure chart of UAA, below, we can see that there is a downside price target of $14.77, which has already been exceeded in premarket trading today.
Bottom line: Prices are likely to open with a gap to the downside today. This could become an exhaustion gap if the volume is heavy and prices stabilize in the days ahead, but we will have to take it one day at a time.