CMI breaks back below 20-day moving average
Cummins Inc. (CMI) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CMI finished the week -0.39% lower at 155.04 after losing $2.51 (-1.59%) today, notably underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 157.18, the market confirmed its breakout through the prior session low after trading up to $2.51 below it intraday.
Daily Candlestick Chart (CMI as at May 22, 2020):
Friday's trading range has been $2.96 (1.88%), that's below the last trading month's daily average range of $5.05. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CMI.
Two candlestick patterns are matching today's price action, the Bearish Short Candle and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical support level at 152.79 (S1). The stock closed back below the 20-day moving average at 157.28 for the first time since May 13th. When this moving average was crossed below the last time on May 13th, CMI actually gained 5.30% on the following trading day.
The share shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Short Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Cummins. Out of 75 times, CMI closed higher 60.00% 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 57.33% with an average market move of 1.48%.