AN still stuck within tight trading range
AutoNation Inc. (AN) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
AN finished the week 11.46% higher at 39.79 after edging lower $0.13 (-0.33%) today on low volume, underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (AN as at May 22, 2020):
Friday's trading range has been $1.35 (3.38%), that's below the last trading month's daily average range of $2.04. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for AN. Prices continued to consolidate within a tight trading range between 37.49 and 40.07 where it has been caught now for the whole last trading week.
After moving higher in the prior session, AutoNation closed lower but above the previous day's open today, forming a bearish Harami Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Spinning Top and the Hanging Man which are both known as bearish patterns.
After having been unable to move above 39.98 in the prior session, the stock ran into sellers again around the same price level today, missing to move higher than 40.07. The last time this happened on Wednesday, AN actually gained 3.80% on the following trading day.
Though still in a long-term downtrend, the short and medium-term trends both turned bullish already.
As prices are trading close to May's high at 41.99, upside momentum could accelerate should the market mark new highs for the month.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Harami Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for AutoNation. Out of 35 times, AN closed higher 62.86% 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 62.86% with an average market move of 1.58%.