My colleague Elizabeth Harrow notified me a while ago that Under Armour (UA: sentiment, chart, options) received an upgrade. I was conflicted, as the stock continues to leave my bullish feelings for it in the dust as it continues to drop. However, I thought I would give the situation a look. UA was upgraded to "market perform" from "underperform" by Raymond James today, and it has rallied nearly 3% in response to the elevation. Technically, the shares are in the midst of a rather nasty battle with overhead resistance in the form of their descending 20-week moving average. The last time the stock closed out a week north of this trendline was the end of September 2007. One thing I noticed, though, is that the shares have been testing this trendline repeatedly since the end of April. The more a level of resistance (or support for that matter) is tested, the weaker it can get. Could we see the 20-week trendline finally give way today? Anything can happen. If that trendline is toppled, is the coast clear for a continued run? Not necessarily - the 40 level looms overhead to provide resistance; then there is the firm's 32-, 50-, and 80-week moving averages to contend with.

Looking over the stock's performance since its near-term high of $73.40 back in August 2007, I can see why pessimism is running at near-extreme levels toward UA. However, this bearish sentiment does provide for one heck of a bounce once the shares finally reach a bottom. Have they reached a bottom? I'm not sure, no one can be sure until we see the bottom in our rear-view mirror. However, it is nice to see the potential for a massive unwinding of pessimism. UA's Schaeffer's put/call open interest ratio (SOIR) of 1.23 is higher than 96% of those taken during the past 52 weeks. This ranking means that option speculators have been more bearish toward UA only 4% of the past 52 weeks. If this pessimism were to unwind, the potential upside could be massive. In addition, there is quite a bit of room for brokerages to follow Raymond James' lead, as 6 of the 7 analysts following UA rate it a "hold" or worse. Finally, any good news could spark an immense short-covering rally, as 43% of the firm's float is sold short.

Again, the potential for a jump is huge ... but the stock is going to have to stage quite the turnaround to jostle the bears from their perch.