American Eagle Hasn't Landed as the Stock Struggles to Find a Bottom

Investors should watch one key price level that would refresh the bear trend.
Stocks quotes in this article: AEO

American Eagle Outfitters (AEO) disappointed stockholders Thursday evening as the retailer posted a profit miss and paused its quarterly dividend. Not good news for investors.

Let's check out the charts and indicators on AEO.

In the daily bar chart of AEO, below, we can see that the shares have suffered the past 12 months. Prices tried to stabilize and rally in July but the rally petered out quickly in August. AEO is back below the 50-day moving average line and the declining 200-day line. The stock is lower in early market trading and we could see a new 52-week price low made in trading Thursday.

Trading volume increased in August as prices declined and that is a negative. The daily On-Balance-Volume (OBV) line is weak and tells us that buyers of AEO have not turned aggressive. The Moving Average Convergence Divergence (MACD) oscillator is back below the zero line in sell territory.

 
In the weekly Japanese candlestick chart of AEO, below, we fail to find bullish clues. Prices are in a longer-term downward trend and trade below the weak 40-week moving average line.
 
The weekly OBV line shows a long decline and just a limited improvement. The MACD oscillator is bearish.
 
 
In this daily Point and Figure chart of AEO, below, we can see that the shares have reached a downside price target around $12. A trade at $10.80 should refresh the bear trend.
 
 
In this weekly Point and Figure chart of AEO, below, we can see an upside price target but a trade at $10.80 is likely to turn the chart bearish.
 
 
Bottom-line strategy: The charts and indicators of AEO are not positive so avoid the long side.
 
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Earnings | Investing | Stocks | Technical Analysis | Apparel | Retail

More from Stocks

As the Market Shifts, So Should Your Strategy

James "Rev Shark" DePorre

Let's look a how to adjust trading techniques to fit the changes in the market.

Market's Frothy With a Side of FOMO

James "Rev Shark" DePorre

The small caps and the Dow finally host the party on Wall Street. But will this broadening action continue?

This Is Still My 'Preferred' Style of Investing

Jim Collins

Let's look at some whopping returns for VLYPO and two others to dive into.

Is This 'Museum' Finally Unlocking Its Doors for Value Investors?

Jonathan Heller

A fascinating and frustrating company over the years, is showing positive signs in 2023.

Boosted by Quarterly Beat and AI's Breakout, Broadcom's Booming

Stephen Guilfoyle

Performance is excellent, free cash flow is robust, guidance is solid and sales are growing. Here's my one nitpick and how to play the stock.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight