CAKE closes lower for the 2nd day in a row
The Cheesecake Factory Incorporated (CAKE) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CAKE finished the month 4.71% higher at 24.00 after tanking $1.44 (-5.66%) today, significantly underperforming the S&P 500 (0.77%). This is the biggest single-day loss in over a month. The last time we've seen such an unusually strong single-day loss on June 11th, CAKE actually gained 9.14% on the following trading day. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 24.39, The Cheesecake confirmed its breakout through the previous session low after trading up to $0.72 below it intraday.
Daily Candlestick Chart (CAKE as at Jul 31, 2020):
Friday's trading range has been $2.06 (8.09%), that's far above the last trading month's daily average range of $1.24. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CAKE.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. In spite of a strong opening the share closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Unable to break through the key technical resistance level at 25.71 (R1), the market closed below it after spiking up to 25.73 earlier during the day. The failure to close above the resistance might increase that levels significance going forward. After having been unable to move above 25.70 in the previous session, the stock ran into sellers again around the same price level today, failing to move higher than 25.73.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "RSI(2) below 20" stand out. Its common bullish interpretation has been confirmed for The Cheesecake. Out of 283 times, CAKE closed higher 60.42% 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 59.36% with an average market move of 0.84%.