American Eagle Stock Could Continue Path Lower

AEO came within one standard deviation of its 40-day moving average

facebook twitter linkedin

This commentary first appeared on Forbes Great Speculations, where Schaeffer's Investment Research is a regular contributor.

American Eagle Outfitters Inc (NYSE:AEO) stock has been underperforming on the charts, recently hitting a July 1, nearly two-year low of $10.98. Plus, the descending 40-day moving average has been putting pressure on the shares. According to Schaeffer’s Senior Quantitative Analyst Rocky White, this trendline has been a bearish indicator for the stock in the past.

According to White’s study, AEO is within one standard deviation of the 40-day moving average for the sixth time in the last three years. After the last five signals, the retailer was lower one month later 80% of the time, averaging a 9% loss for that period. A comparable move from the stock’s current perch of $12.15 would place it around the $11 mark.

AEO July20

Of the 12 analysts in coverage, four carry a “strong buy” rating on American Eagle stock, while seven say “hold” or worse. Meanwhile, the 12-month consensus price target of $16 is a 31.7% premium to current levels, leaving plenty of room for price-target cuts and/or downgrades in the future.

AEO is sporting relatively cheap options at the moment. This is per the equity’s Schaeffer’s Volatility Index (SVI) of 58%, which ranks higher than just 28% of readings from the past year.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners