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American Eagle Clings to Support After Earnings Dump — Chart

American Eagle Outfitters stock is getting smacked after reporting earnings. Here's the must-hold level of support.

Shares of American Eagle Outfitters  (AEO) - Get American Eagle Outfitters, Inc. Report are getting hit hard on Thursday, down about 10% after reporting earnings.

Coincidentally, Chewy  (CHWY) - Get Chewy, Inc. Class A Report is also suffering from a similar post-earnings selloff on the day.

American Eagle revenue of $1.19 billion missed analysts' expectations of $1.23 billion, although earnings topped expectations.

Analysts were looking for a better sales figure ahead of the back-to-school season and as the economy continues to rebound.

Is the selloff an overreaction? Perhaps, particularly as American Eagle stock was already down 23.2% from the 2021 high ahead of the print. It’s even got one Real Money contributor buying today's pullback.

Let’s look at a key support area that the stock is trying to hold.

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Trading American Eagle Stock

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Daily chart of American Eagle Outfitters.

Daily chart of American Eagle Outfitters.

American Eagle stock topped a penny shy of $39 earlier this summer before embarking on a multi-month decline. Amid that slide, the stock lost all of its daily moving averages.

Now sitting near $27.50, shares are holding a key level on the chart.

Although the stock slightly broke below both measures, American Eagle has reclaimed the 50-week moving average and the 61.8% retracement of its range from the 2020 low to the 2021 high.

For those that are aggressive and want to be long this name, they can use a close below Thursday’s low as their stop-loss.

A break of that level could put $25 on deck.

On the upside, a move over Thursday’s high (currently at) $28.37 could open the door to the 200-day moving average. Above that and the gap-fill mark near $30 is possible.

It has not been an easy ride for American Eagle stock lately.

Not only is the stock down big from the highs a few months ago, but it’s putting in its fourth straight daily decline and sixth loss in the last seven trading sessions.