AAP closes within previous day's range
Advance Auto Parts Inc W/I (AAP) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
AAP ended the week 0.5% higher at 133.59 after losing $1.08 (-0.8%) today, underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (AAP as at Feb 14, 2020):
Friday's trading range has been $3.19 (2.37%), that's slightly below the last trading month's daily average range of $3.28. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AAP.
In spite of a strong opening the share closed below the prior day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on December 13, 2019, AAP lost -1.10% on the following trading day.
Prices are trading close to the key technical support level at 131.50 (S1).
While Advance Auto is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might speed up should prices move above the close-by swing high at 136.17 where further buy stops could get activated.
Among the two market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Advance Auto. Out of 91 times, AAP closed higher 53.85% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 58.24% with an average market move of 0.80%.