GET DAILY SIGNALSMall-Based Apparel Retailers with Sell Ratings Because of Fundamentals
Traditional shopping malls and the retailers that operate in them have been struggling for a number of years as consumers have shifted their shopping preferences. This shift was going on well before the pandemic hit and now it appears the health crisis has only made things worse. Among the companies that are struggling are two apparel retailers that caught my eye because they are overbought on their daily charts—American Eagle Outfitters (AEO) and Gap, Inc. (GPS). American Eagle is also overbought on its weekly chart.
After looking at the charts for these two stocks, I started doing more research to see what other indicators showed. Both companies are pretty weak on the fundamental side with American Eagle getting negative marks in four categories and it doesn’t have any positive marks on the fundamental side. Tickeron’s AI based rating system ranks the stock as a “sell”. The company gets poor marks in its Outlook Rating, SMR Rating, P/E Growth Rating, and Seasonality Score.
Gap has two negative scores and three positive scores, but one of the areas with a negative mark is the SMR rating. I find the SMR rating especially valuable in my evaluations. The other area where the company scores poorly is in the Profit vs. Risk Rating.
I mentioned earlier that the stocks were overbought on their daily charts and that is based on the daily stochastic indicators. Both stocks have been in overbought territory for three days. Both stocks have received bearish signals from their RSI indicators recently and Gap received a bearish signal from the Aroon Indicator a few weeks back. American Eagle received a bearish signal from its Bollinger Bands last week.
Both American Eagle and Gap are expected to report fourth quarter earnings during the first week of March. American Eagle’s earnings are expected to come in flat compared to last year and up a penny from the third quarter. Gap’s earnings are expected to drop sharply compared to last year. The company reported EPS of $0.58 in Q4 2019 and the consensus estimate for Q4 2020 is $0.17. Gap earned $0.25 per share in Q3 2020.
A complete comparison and the exact ratings numbers appear below.
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Harry Richardson — Algorithmic Trader & Strategy Developer Harry is an algorithmic trader specializing in impulse and breakout trading strategies across cryptocurrency and equity markets. With more than 10 years of experience in developing automated trading systems, he focuses on building structured algorithms designed to capture momentum while maintaining strict risk control. His approach combines quantitative analysis, real-market execution, and continuous performance monitoring. Vitalii prioritizes risk management, drawdown control, and strategy stability over short-term optimization, ensuring algorithms are adaptable to changing market conditions. He has developed and tested hundreds of automated strategies, working extensively with live trading environments, forward testing, and portfolio-level algorithm management. His work centers on transforming trading ideas into fully operational, scalable automated systems.
Aroon Indicator for AEO shows an upward move is likely
AEO's Aroon Indicator triggered a bullish signal on October 09, 2026. Tickeron's A.I.dvisor detected that the AroonUp green line is above 70 while the AroonDown red line is below 30. When the up indicator moves above 70 and the down indicator remains below 30, it is a sign that the stock could be setting up for a bullish move. Traders may want to buy the stock or look to buy calls options. A.I.dvisor looked at 246 similar instances where the Aroon Indicator showed a similar pattern. In 197 of the 246 cases, the stock moved higher in the days that followed. This puts the odds of a move higher at 80%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 26, 2026. You may want to consider a long position or call options on AEO as a result. In 61 of 82 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 74%.
The Moving Average Convergence Divergence (MACD) for AEO just turned positive on October 26, 2026. Looking at past instances where AEO's MACD turned positive, the stock continued to rise in 30 of 43 cases over the following month. The odds of a continued upward trend are 70%.
AEO moved above its 50-day moving average on September 28, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for AEO crossed bullishly above the 50-day moving average on October 02, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 10 of 13 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 77%.
Following a +8.43% 3-day Advance, the price is estimated to grow further. Considering data from situations where AEO advanced for three days, in 210 of 298 cases, the price rose further within the following month. The odds of a continued upward trend are 70%.
Bearish Trend Analysis
The RSI Indicator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.
The Stochastic Oscillator entered the overbought zone. Expect a price pull-back in the foreseeable future.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AEO declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 79%.
AEO broke above its upper Bollinger Band on October 26, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron Price Growth Rating for this company is 42 (best 1 - 100 worst), indicating steady price growth. AEO’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of 43 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.845) is normal, around the industry mean (1.881). P/E Ratio (9.759) is within average values for comparable stocks, (12.355). Projected Growth (PEG Ratio) (0.100) is also within normal values, averaging (0.517). Dividend Yield (0.026) settles around the average of (0.066) among similar stocks. P/S Ratio (0.447) is also within normal values, averaging (0.652).
The Tickeron SMR rating for this company is 46 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is 84 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. AEO’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 87, placing this stock worse than average.
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
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General Information
an operator of specialty retail stores
Industry ApparelFootwearRetail
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