We are removing Urban Outfitters (URBN) from our short ideas because it is starting to show signs of short-term downside exhaustion.
We are replacing URBN on our short ideas list with another retailer, American Eagle Outfitters (AEO):
AEO is showing intermediate-term signs of upside exhaustion per the DeMARK Indicators (red “13” on the chart) following a rally of over ~75% this summer. The exhaustive signal comes near resistance from the February high, which is a natural place for a pullback to occur.
As of today, AEO is also shows short-term signs of upside exhaustion, helping to further enhance the overbought condition. Short-term momentum also appears to be waning after the steep upmove per the daily MACD, supporting a pullback.
A downside target for AEO can be gauged by a key support area near $14.00, defined by the 200-day (~40-week) moving average and the weekly cloud model (shaded area on the chart). To manage risk, a stop-loss can be placed above today’s high (~$17.60).
American Eagle Outfitters (AEO, $16.77):
Target: $14.00
Stop-Loss: $17.60