BIG breaks below key technical support level
Big Lots Inc. (BIG) Technical Analysis Report for Jun 30, 2020 | by Techniquant Editorial Team
BIG finished the month 8.39% higher at 42.00 after losing $1.14 (-2.64%) today, notably underperforming the S&P 500 (1.54%). Trading $0.94 higher after the open, the stock was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (BIG as at Jun 30, 2020):
Tuesday's trading range has been $1.91 (4.49%), that's slightly below the last trading month's daily average range of $2.29. Things look different on the weekly timeframe, where the market's trading range of the last week has been way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for BIG.
One bullish candlestick pattern matches today's price action, the Bullish Hikkake Pattern.
Prices broke below the key technical support level at 42.33 (now R1), which is likely to act as resistance going forward. After having been unable to move lower than 41.79 in the previous session, the market found buyers again around the same price level today at 41.53. The last time this happened on June 25th, BIG gained 27.15% on the following trading day.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and could now be heading back down towards the mean of the Bollinger Bands at 36.24.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the upper Bollinger Band" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Big Lots. Out of 81 times, BIG closed higher 62.96% 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 54.32% with an average market move of 0.85%.