AOS breaks back below 100-day moving average
A.O. Smith Corporation (AOS) Technical Analysis Report for May 12, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, AOS finished Tuesday at 42.08 tanking $1.86 (-4.23%), notably underperforming the S&P 500 (-2.05%). This is the biggest single-day loss in over a month. The last time we've seen such an unusually strong single-day loss on March 16th, AOS actually gained 3.00% on the following trading day. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 43.80, the share confirmed its breakout through the prior session low after trading up to $1.75 below it intraday.
Daily Candlestick Chart (AOS as at May 12, 2020):
Tuesday's trading range has been $1.91 (4.34%), that's far above the last trading month's daily average range of $1.24. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AOS.
Two candlestick patterns are matching today's price action, the Bearish Belt-hold and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical support level at 41.14 (S1). The market closed back below the 100-day moving average at 42.50 for the first time since May 5th.
The stock shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Belt-hold" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for A. O. Smith. Out of 21 times, AOS closed higher 71.43% 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 66.67% with an average market move of 3.13%.