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

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Tom Bowley
About the author: co-founded Invested Central and served as the site's Chief Market Strategist for more than 10 years. His unique trading style combines both his fundamental and technical strategies to systematically manage risk while trading. A regular contributor to StockCharts.com's bi-weekly ChartWatchers newsletter since 2006, Tom's role at StockCharts has expanded significantly since he joined the company as a full-time Senior Technical Analyst in March of 2015. Learn More
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