AXL breaks below key technical support level
American Axle & Manufacturing Holdings Inc. (AXL) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, AXL ended the month -7.11% lower at 7.06 after losing $0.03 (-0.42%) today on high volume, strongly underperforming the S&P 500 (0.77%) following today's earnings report. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (AXL as at Jul 31, 2020):
AXL reported earnings of $-1.79 per share before today's market open. With analysts having expected an EPS of $-2.05, American Axle & Manufacturing Holdings Inc. surpassed market expectations by 12.7%. The company's last earnings report was released on May 8, 2020, when American Axle & Manufacturing Holdings Inc. reported earnings of $0.2 per share surpassing market expectations by 225.0%.
Friday's trading range has been $0.83 (11.59%), that's far above the last trading month's daily average range of $0.44. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AXL.
One bullish candlestick pattern matches today's price action, the Takuri Line.
Prices broke below the key technical support level at 7.09 (now R1), which is likely to act as resistance going forward. The last time this happened on July 9th, AXL actually gained 5.72% on the following trading day.
While 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.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Stock Earning Report based market condition "Trading Day post strong Earnings Report" stand out. Although it is usually interpreted as neutral, it has actually shown to be bearish for American Axle. Out of 24 times, AXL closed lower 54.17% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 58.33% with an average market move of -1.15%.