AEO Gives us 100% Options Trade
by Mike Paulenoff
August 22, 2014 • 12:00 AM EDT
On Tuesday we added a long model portfolio position in the American Eagle Outfitters (AEO) September 11.00 calls, as our pattern work argued for a positive response to the next morning's earnings release.
We wrote: "The technical set-up as well as a 29% Street short position suggest that it will not take much to light a fuse under AEO."
The company reported better-than-expected earnings, and the stock ran up 12% the next session, giving us a more than 100% gain on our options.
The first chart below shows what AEO did after our call.
The second chart shows the bigger picture of the stock. What our technicals had told us was that the stock had been carving out a base-like accumulation pattern since mid-April, and had absorbed some intense downside volume capitulation spikes.
In addition, the Apr-Aug 2014 basing action had been unfolding above the prior major low at 10.00 back in September 2011, increasing the potential for a secondary double-bottom low.
We noted on Wednesday, with the stock trading at 12.49, to expect additional strength that projects into the 13.60/90 target zone.
The stock closed Friday at 13.46.
Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts on
ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international
markets, plus key ETF component stocks in sectors like technology, mining, and banking.
Sign up for a Free 7-day Trial!
More Top Calls From Mike
Thirty minutes after the opening bell on November 24, 2025, I posted the following heads-up to MPTrader members about the technical setup in META:META has the right technical look of a significant U-Turn to the upside after completing a 27% August-November correction from 796.25 (8/15/25) to 580.32 (11/21/25)... To gain more powerful upside traction, META needs to climb and sustain above nearest-term resistance at 614.70 to 616.50, which if (when) taken out, will open a higher price pathway to the 670 area to challenge the down-sloping 200 DMA... Last is 609.27...
Last Friday morning, to calm frazzled nerves amid a 1% pre-market plunge that was threatening to complete a 100% give back of the prior week's 3.
Late on Friday, fellow MPTrader member MarkinQueens exclaimed: Mike's XOM (Exxon Mobil) chart from August is working! Last $117.26!Back on August 25th, this is what we discussed about Crude Oil and XOM:Just in case anyone is wondering what the chart of nearby Crude Oil is looking like as we approach the "official" end of summer.
On August 12, 2025, this was my response to an inquiry from an MPTrader member about intense weakness impacting SMR (NuScale Power Corp):SMR (NuScale Power)-- Fellow member Irv66 asked for an update on this modular nuclear reactor manufacturer that blasted-off from 11.08 in early April to 53.50 at the end of July (+382%), but has since been in the grasp of a major correction from 53.50 to 38.33 (-28.6%). My pattern work argues that SMR is nearing key support from 37.50 down to 33.
ARKK (ARK Innovation Fund, ETF)-- Back on August 20, 2025, this is what we discussed about ARKK:Fellow member Pawel has requested an update on Cathie Wood's fund, which in June thrust up and out of a 3-1/2 year base-accumulation period and pattern above 68.40/50 that subsequently climbed to my initial target in the vicinity of 80 (see my attached Daily Chart). Since the 7/21/25 high at 79.