Under Armour, Inc. (SAU) missed the earnings per share (EPS) estimates when the company reported results before the opening on May 11. The stock gapped lower and continues to decline, trading as low as $7.15 on May 14. Under Armour shares closed last week at $7.71, down 64.3% year-to-date and in a bear market territory to 72.2% below the 52 week high of $27.72 set on July 25, 2019. The stock is 7.8% above the May 14 low.
The daily chart shows Under Armour slide to the bottom of its 50-day simple moving average, as it has refused to last week’s low. The weekly chart shows the stock below its 200-week simple moving average, I consider this as the technical, the return to the average.
Under Armour stock set its all-time high of $54.70 during the week of Sept. 18, 2015. The stock has dropped by 79% bear market to a multi-year low of $11.40 during the week of Nov. 10, 2017. Under Armour then posted a bull market gain of 138% of its 200-week simple moving average at $27.15 on the 28th of June 2019. The failure has led to the decline of the last week is low.
Sales of sports clothing have been affected by the spread of COVID-19 and the closure of the U.S. economy as consumers to stay on lockdown.
The daily chart for under Armour
The daily chart for under Armour shows the formation of a death cross on Sept. 18, 2019. This happened when the 50-day simple moving average fell below the 200-day simple moving average to indicate that the price decrease will follow. Where, under a death cross, the strategy is to sell the strength of the 200-day simple moving average. It was feasible to $21.62 during the week of December. 26.
The stock had a huge gap lower price on Feb. 11 on a negative reaction on the earnings. Under Armour shares then struggled to the low seen last week.
The weekly chart for under Armour
The weekly chart for under Armour is negative but oversold, with the stock below its five-week modified moving average at $10.12. The stock is also below its 200-week simple moving average, or the return to the average, to $21.25.
The 12 x 3 x 3 weekly slow stochastic reading has slipped 17.51 last week, down from 17.76 on 8 May. The reading remains below the oversold threshold of 20.00.
Trading strategy: Buy under Armour stock on the weakness of its semi-annual value level at $6.34. Reduce the holdings of the strength to a monthly risky level at $13.72.
How to use my value levels and risky levels: The closing price on Dec. 31, 2019, were inputs to my proprietary analytics. Half-yearly and annual, the levels are still on the charts. Each calculation uses the past nine closes in these time horizons.
The second quarter of 2020 the level has been established based on the 31 March, close by, and the level of the month of May was established based on the April 30 close. New weekly levels are calculated following the end of each week, and new quarterly levels occur at the end of each quarter. Half-yearly levels are updated in the middle of the year, while the levels remain in play throughout the year.
My theory is that nine years of volatility between the farm are to assume all possible bullish or bearish event for the stock are taken into account. To capture the volatility of stock prices, investors should purchase shares of the weakness of a plan, the value and reduce the holdings of the strength to a risky level. A pivot is a level value of the risk level that was violated in its time horizon. Hubs act as magnets that have a high likelihood to be re-tested prior to their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings has been based on the backtesting of many methods of reading the stock prices of the momentum with the objective of finding the combination that resulted in the least number of false signals. I’ve been following the stock market crash of 1987, so I was happy with the results of more than 30 years.
The stochastic reading covers the duration of 12 weeks, high, low, and close for the stock. There is a row of calculation of the difference between the highest and the lowest compared to the farm. These levels are modified for a fast reading and slow reading, and I found that the slow playback will work best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered as overbought and readings below 20.00 regarded as oversold. A reading above 90.00 is considered to be a “swell parabolic bubble” of the training, which is usually followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered to be “too cheap to ignore,” which is usually followed by a gain of 10% to 20% over the next three to five months.
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Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.