Techie Tuesdays: Under Armour

This is the seventh installment of Techie Tuesdays. So far we have looked at Exxon Mobil, Starbucks, J.P. Morgan Chase, Medco Health Solutions, Toronto-Dominion, and Verizon Communications. Today we will tackle Under Armour. If you are not familiar with Under Armour, here is their “Click, clack” SuperBowl ad from 2008.

Under Armour (Ticker: UA) is a Baltimore, Maryland based performance apparel company. If you are a sports fan, you can find Under Armour gear on your favorite athletes such as Cole Hamels, Kimmie Meissner, Ray Lewis and Vernon Davis. Under Armour opened in 1995 and went public in 2005. 

Under Armour’s stock has lost 28.7 percent of its value in the past 52 weeks, which is better than the S&P 500’s loss of 35.9 percent during the same period. (Data from Yahoo Finance)

So is Under Armour undersubscribed? Should you click, clack or sell? The charts include data up to just before the King holiday and UA closed Friday at $19.97. Let’s see what the technical indicators reveal about Under Armour.

Today we’ll use the Moving Average Convergence Divergence (MACD).

The MACD uses exponential moving averages from three periods: 9, 12 and 26 days to form two lines. One line plots the difference between the 26 and 12-day EMAs, the other line is the 9-day exponential moving average of the MACD and serves as a trigger line. Both lines are tracked against a center line (which equals zero). There are a few ways to use the MACD, here are the signals:

Bullish – Positive divergence (26 day EMA minus 12 day EMA is greater than zero), bullish moving average crossover (the MACD line crosses above the 9 day EMA of the MACD), and the bullish center line crossover (the MACD line crosses above zero).

Bearish – Negative divergence (26 day EMA minus 12 day EMA is less than zero), bearish moving average crossover (the MACD line crosses below the 9 day EMA of the MACD), and the bearish center line crossover (the MACD line crosses below zero).

The chart is rather large to include in this post, so click here to view the Interactive Yahoo chart for UA and let’s take a look at its MACD data as of 1/16/09.

MACD (26-day minus 12-day EMA): -0.86

9-day EMA of the MACD: -0.27 

Divergence (MACD minus 9-day EMA of the MACD): -0.58

The MACD signs appear to be bearish. As of 1/16/09, VZ has negative divergence and the MACD is below zero. Upon examining the crossovers on the chart we can see that the MACD and the 9-day EMA are both negative. The MACD crossed over the EMA (heading downward) on 1/10. The stock seems to bounce back once the EMA dips below the negative 2 level.

I am a fan of Under Armour and many of the athletes who wear it, but the charts trump my personal opinion, so TST’s Techie Tuesday Recommendation: SELL