Deckers Outdoor (DECK) Just Went From Disbelief To Panic Phase

In late January we pointed out the death cross in Deckers Outdoor (DECK) and mentioned investors are going through the disbelief phase from the Mamis Investor Sentiment Cycle.

January 25th chart

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Updated Chart

Deckers Outdoor (DECK)
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UGG! Deckers Falls 16% After-Hours

Deckers Outdoor (DECK) fell 16% after the company missed earnings expectations and cuts its full-year earnings guidance.

The maker of UGG boots posted 20 cents of EPS, 5 cents below expectations. Revenue met analysts’ expectations. Earnings will likely decline 9% to 10% this year, the company said, versus its prior guidance for flat earnings.

With today’s earnings news it looks like investors are going through the Panic phase from the Mamis Investor Sentiment Cycle.

OVERT WARNING TO PANIC
The area of sustained directional trending price action to the downside takes place is between the Overt Warning and Panic phases. There will be some sort of catalyst. Perhaps it is an earnings warning or some point of economic data that leads the crowd to finally clue in that the nagging negative price action they have been watching is the beginning of something big and bad.

The 200-day moving average is broken, and CNBC alerts investors. Everyone knows that the ship is sinking. Those who bought in the churning top realize they are holding the bag and stop buying the dips. Smart money shorts each failing bounce. Stop losses are hit, and margin calls force liquidation. Supply simply overwhelms demand and price action becomes a one-way street.

Have you memorized the Mamis Investor Sentiment Cycle phases yet?