AOS finds buyers at key support level
A.O. Smith Corporation (AOS) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, AOS finished the month 2.16% higher at 48.14 after losing $0.32 (-0.66%) today on high volume, notably underperforming the S&P 500 (0.77%). Today's close at 48.14 marks the lowest recorded closing price since July 9th. Closing below Thursday's low at 48.40, the market confirmed its breakout through the previous session low after trading up to $1.24 below it intraday.
Daily Candlestick Chart (AOS as at Jul 31, 2020):
Friday's trading range has been $2.15 (4.4%), that's far above the last trading month's daily average range of $1.14. 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.
After trading down to 47.16 earlier during the day, the share bounced off the key technical support level at 47.74 (S1). The failure to close below the support might increase that levels importance as support going forward. A. O. Smith closed below the 50-day moving average at 48.31 for the first time since June 26th. When this moving average was crossed below the last time on June 26th, AOS actually gained 4.48% on the following trading day.
Though the stock is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
As prices are trading close to July's low at 46.17, downside momentum might accelerate should AOS mark new lows for the month.
Among the four 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 60.05% 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 1.15%.