AOS dominated by bears dragging the market lower throughout the day
A.O. Smith Corporation (AOS) Technical Analysis Report for May 11, 2020 | by Techniquant Editorial Team
AOS ended Monday at 43.94 losing $0.85 (-1.9%) on low volume, notably underperforming the S&P 500 (0.01%). The bears were in full control today, moving the market lower throughout the whole session. 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 May 11, 2020):
Monday's trading range has been $0.57 (1.28%), that's far below the last trading month's daily average range of $1.20. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AOS.
After moving higher in the previous session, the market closed lower but above the prior day's open today, forming a bearish Harami Candle. The last time this candlestick pattern showed up on March 31st, AOS lost -5.82% on the following trading day. Additionally, two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical resistance level at 44.70 (R1). After having been unable to move lower than 43.87 in the previous session, A. O. Smith found buyers again around the same price level today at 43.79.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Buying could speed up should prices move above the nearby swing high at 44.99 where further buy stops might get triggered. Selling could accelerate should prices move below the close-by swing low at 42.69 where further sell stops might get activated.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing High" stand out. Though it is usually interpreted as neutral, it has actually shown to be bullish for A. O. Smith. Out of 758 times, AOS closed higher 53.69% 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 61.08% with an average market move of 0.65%.