Under Armour Inc.   (UAA) (UA) began the August 1 session with an ugly downside gap. This earnings-inspired breakdown drove shares to multi-year lows after taking out major support near the early 2017 lows. Despite the steep 10% drop as this month began, further downside has been very limited since the decline. Further, the recent rebound should be encouraging for patient investors, as an important low may now be in place.

At midday Tuesday UAA stock is up just shy of 3% and is beginning to battle heavy supply near the $17.00 area. This key zone held multi-month lows earlier this year. Just above this area is the August 1st high of $17.20. If UAA stock can continue to gain ground in the near term, a huge hurdle will have been cleared and a major bottom could be forming.

For the remainder of this week, Under Armour investors should keep a close eye on the $17.00 area. If the stock can continue to attract attention above this zone, a very low-risk entry opportunity will have developed. As this plays out the stock should be considered a buy near current levels. On the downside, a close back below $16.00 would be a clear warning sign that a more drawn out bottoming pattern will be needed before a significant low is reached.

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At the time of publication, Morrow was long shares of UAA. 

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