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
About the author:
Tom Bowley is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market.
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