AOS runs into sellers around 42.81 for the third day in a row
A.O. Smith Corporation (AOS) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
AOS finished the week 4.48% higher at 42.22 after losing $0.46 (-1.08%) today on low volume, strongly underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Closing below Thursday's low at 42.25, the stock confirmed its breakout through the prior session low after trading up to $0.35 below it intraday.
Daily Candlestick Chart (AOS as at May 22, 2020):
Friday's trading range has been $0.91 (2.13%), that's below the last trading month's daily average range of $1.33. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for AOS.
Even with a strong opening the market closed below the previous day's open and close, forming a bearish Engulfing Candle. 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.
After trading as low as 41.90 during the day, A. O. Smith found support at the 100-day moving average at 42.04. The share closed back below the 20-day moving average at 42.47. AOS ran into sellers again today around 42.81 for the third trading day in a row after having found sellers at 42.94 in the prior session and at 42.75 two days ago. The last time this happened on April 3rd, AOS actually gained 6.55% on the following trading day.
The stock shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might speed up should prices move above the close-by swing high at 42.94 where further buy stops could get triggered.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 100" stand out. Its common bullish interpretation has been confirmed for A. O. Smith. Out of 21 times, AOS closed higher 52.38% 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 71.43% with an average market move of 3.25%.