American Eagle (AEO) shares surged as much as 34% on Thursday—its largest intraday jump on record—after reporting better-than-expected 2Q revenue, with momentum boosted by its high-profile Sydney Sweeney ad campaign.

Technical Take

Parabolic Spike & Overbought RSI: Yesterday’s surge pushed RSI to 80.8, a level that historically signals buyer exhaustion, rather than sustained momentum.

Gap Risk High: The gap from $15 to $19 is likely to be filled as the buying pressure fades, with prior AEO gaps closing within days shortly after.

Moving Averages Reclaimed: The stock vaulted above its 50-, 100-, and 200-day SMAs on record volume yesterday. Breakouts of this kind often retest support before establishing new trends.

Pain Trade Yesterday: Short sellers lost $150M on paper yesterday—one of the steepest single-day losses for AEO bears in the past year. The move leaves shorts down $75M over the past 12 months.

Elevated Short Base: Short interest remains high at 17.2% of float, reflecting a material increase in demand following the Sydney Sweeney ad campaign.

Borrow Conditions: With availability above 40M shares, SI utilization at 40%, and low financing costs, borrow liquidity remains ample—allowing shorts to initiate or reload at current levels.

Next Move

With shorts already punished, overbought technicals, and a parabolic gap above key moving averages, odds favor a short-term pullback as the $15–$19 gap fills.

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