Under Armour Double Top Could Spell Downside Ahead

Under Armour, Inc. (UAA) shares moved nearly 10% lower on Wednesday morning following the company's investor day. While it laid out plans to introduce more disciplined operations and focus on more profitable growth, the company didn't cite any specific five-year goals to provide investors with greater clarity. Analysts had hoped to see a detailed five-year plan calling for modest revenue growth next year and a significant new product reveal.

In late October, Under Armour's stock moved sharply higher after it posted better-than-expected third quarter financial results. Revenue rose 2.1% to $1.44 billion, beating consensus estimates by $20 million, while earnings per share reached 25 cents (non-GAAP), beating consensus estimates by 13 cents per share. Analysts were hopeful that the company was turning a corner ahead of the critical fourth quarter holiday season.

The uncertainty surrounding this year's investor day means that investors will be even more closely watching fourth quarter financial results, which are due out early next year.

From a technical standpoint, the stock formed a double top chart pattern that could point to downside ahead. The relative strength index (RSI) moved closer toward oversold levels at 38.43, but the moving average convergence divergence (MACD) experienced a bearish crossover. These indicators suggest that the stock could see some near-term consolidation, but the overall trend remains bearish over the intermediate term.

Traders should watch for a breakdown from the double top pattern and 200-day moving average at around $20.00. A high-volume close below this critical level could lead to a move toward 52-week lows of $12.50 over the intermediate term. A rebound from these levels could invalidate the double top, and shares could retest their highs of around $25.00 made earlier this year.

The author holds no position in the stock(s) mentioned except through passively managed index funds.