AOS finds support at 50-day moving average
A.O. Smith Corporation (AOS) Technical Analysis Report for May 13, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, AOS ended Wednesday at 39.98 tanking $2.10 (-4.99%), significantly underperforming the S&P 500 (-1.75%). This is the biggest single-day loss in over a month. The bears were in full control today, moving the market lower throughout the whole session. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (AOS as at May 13, 2020):
Wednesday's trading range has been $2.21 (5.28%), that's far above the last trading month's daily average range of $1.30. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AOS.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading as low as 39.73 during the day, the stock found support at the 50-day moving average at 39.91. The last time this happened on April 20th, AOS actually lost -4.04% on the following trading day. The market closed below the 20-day moving average at 41.74 for the first time since April 3rd.
The share shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "3 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for A. O. Smith. Out of 132 times, AOS closed higher 54.55% 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 62.12% with an average market move of 1.20%.