Can American Eagle Outfitters Hold Solid Gains After Earnings?

American Eagle Outfitters (AEO - Get Report) , a mall-based retailer of apparel and accessories, will report quarterly earnings after the closing bell on Wednesday. Its 200-day and 200-week simple moving averages are technical barriers as this week begins. American Eagle is one of many retail stocks that has not recovered from the crash of 2008, but it has a solid year-to-date gain.

Analysts expect the retailer to earn 34 cents a share. The company has a winning streak of beating this estimate three quarters in a row. Wall Street says that American Eagle Outfitters is in the midst of a positive turnaround story, benefiting from dwindling competition, although the demand for clothing is not up to par.

Here's the daily chart for American Eagle Outfitters

The daily chart shows that the stock had a close of $16.40 on Friday, up 4.9% so far in the fourth quarter and up 18.2% year to date. It is in correction territory -- 11.3% below the 2015 high of $18.49, set on Aug. 18.

The stock had been below a "death cross" since Feb. 12, 2013, when the stock closed at $20.31. A "death cross" occurs when the 50-day simple moving average declines below the 200-day simple moving average, indicating that lower prices lie ahead.

This was reversed by a "golden cross," confirmed on Sept. 30, 2014, when the stock closed at $14.52. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. This positive technical signal was in effect as 2015 began, and tracked the stock to its 2015 high of $18.49, set on Aug. 18.

Note that a price gap higher on March 4 was a positive reaction to earnings. The stock then gapped lower on Aug. 19 on a negative reaction to earnings, which was then exaggerated by the flash crash of Aug. 24. This four-day decline totaled 23.4% to the Aug. 24 low of $14.17, which held at a secondary low of $14.13 on Nov. 16. Since then the stock is up 15.7% to a test of its 200-day simple moving average of $16.56 on Friday.

Note that a "death cross" occurred on Oct. 10, which makes the 200-day a key chart resistance and makes the 50-day simple moving average of $15.73 a key chart support.