Don't Ignore This Chart!

Applied Optoelectronics Lengthens Downtrend, Approaches Next Major Support

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Applied Optoelectronics (AAOI) was one of the darlings of Wall Street in 2017.....until early August.  Since that time, AAOI has declined nearly 60% in less than three months and has shown no signs of a reversal.  The most recent drop a little over a week ago was as a result of lowered revenue and EPS guidance and that jump started AAOI's move towards its next key support near 40.  Take a look at the chart:

Gap support from 37-40 needs to hold or AAOI will likely continue its downward spiral to the top of the previous gap near 27.  Volume trends are negative and note the SCTR has fallen from near the top of the stock universe in the upper 90s to 5 as of today.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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