AOS finds buyers around 43.72 for the third day in a row
A.O. Smith Corporation (AOS) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, AOS ended the week 4.62% higher at 43.93 after edging lower $0.07 (-0.16%) today, slightly underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Trading $0.34 higher after the open, A. O. Smith was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on February 4th, AOS actually gained 2.36% on the following trading day. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (AOS as at Feb 14, 2020):
Friday's trading range has been $0.62 (1.41%), that's far below the last trading month's daily average range of $1.24. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AOS. Prices continued to consolidate within a tight trading range between 43.72 and 44.70 where it has been caught now for the last three trading days.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top.
After spiking up to 44.34 during the day, the stock found resistance at the 20-day moving average at 44.29. The market found buyers again today around 43.72 for the third trading day in a row after having found demand at 43.72 in the previous session and at 43.72 two days ago.
Though the share is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the nearby swing high at 44.70 where further buy stops might get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Bounce off SMA 20" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for A. O. Smith. Out of 46 times, AOS closed higher 50.00% 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 67.39% with an average market move of 1.73%.