AOS finds buyers again around 42.10
A.O. Smith Corporation (AOS) Technical Analysis Report for May 20, 2020 | by Techniquant Editorial Team
AOS finished Wednesday at 42.46 gaining $0.48 (1.14%), underperforming the S&P 500 (1.67%). Trading $0.24 higher after the open, the share was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (AOS as at May 20, 2020):
Wednesday's trading range has been $0.65 (1.53%), that's far below the last trading month's daily average range of $1.37. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AOS. Prices continued to consolidate within a tight trading range between 41.73 and 43.79 where it has been caught now for the last three trading days.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Bearish Spinning Top. The last time a Bearish Spinning Top showed up on May 5th, AOS actually gained 3.53% on the following trading day.
The stock managed to close back above the 100-day moving average at 42.15. After having been unable to move lower than 41.96 in the previous session, the market found buyers again around the same price level today at 42.10.
A. O. Smith shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying could accelerate should prices move above the close-by swing high at 43.79 where further buy stops might get triggered. As prices are trading close to May's high at 44.99, upside momentum could speed up should AOS mark new highs for the month.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for A. O. Smith. Out of 418 times, AOS closed higher 59.81% 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 61.48% with an average market move of 0.99%.