Under Armour Inc. (UAA) is the Stock of the Day at Real Money after the shoe and apparel maker lowered its full-year revenue guidance and acknowledged that the government is looking into its accounting practices. Those revelations sent Under Armour shares down 13% in trading before Monday's opening bell.
Let's check out the charts and indicators this Monday to see how much price weakness we may be in store for at Under Armour.
In this daily bar chart of UAA, below, we can see that prices could break below the early October lows. A gap lower opening is anticipated, so prices will be below the rising 50-day moving average line. The On-Balance-Volume (OBV) line will probably turn down and the Moving Average Convergence Divergence (MACD) oscillator will likely cross to the downside for a take profits sell signal and will be that much closer to crossing the zero line and an outright sell signal. The $18-$17.50 is a small area of potential support from August and we will need to wait and see if it will hold.
In this weekly bar chart of UAA, below, we find prices in a weak state as of last Friday's close. UAA is below the flat to slightly declining 40-week moving average line. The weekly OBV line has been steady the past three months while the MACD oscillator is below the zero line. A weekly close below $18 could result in a small measured move down to the $14 area.
In this Point and Figure chart of UAA, below, we can see that a trade at $17.59 will be a new low for the move down. The software is projecting a possible price target in the $9 area.
Bottom line strategy: Reports of investigations by government agencies are hard to evaluate and quantify, so don't be surprised that traders and investors sell first and ask questions later.
