CMI closes lower for the 2nd day in a row
Cummins Inc. (CMI) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CMI finished Wednesday at 209.60 losing $0.53 (-0.25%), but still slightly outperforming the S&P 500 (-0.46%). Closing below Tuesday's low at 210.11, the share confirmed its breakout through the previous session low after trading up to $0.88 below it intraday.
Daily Candlestick Chart (CMI as at Sep 16, 2020):
Wednesday's trading range has been $4.47 (2.11%), that's slightly above the last trading month's daily average range of $4.36. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for CMI.
In spite of a strong opening Cummins 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 212.77 (R1), the market closed below it after spiking up to 213.70 earlier during the day. The failure to close above the resistance could increase that levels importance going forward. When prices bounced off a significant resistance level the last time on September 9th, CMI lost -2.32% on the following trading day. After having been unable to move above 213.98 in the previous session, the stock ran into sellers again around the same price level today, missing to move higher than 213.70.
Though CMI is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Buying could accelerate should prices move above the close-by swing high at 213.98 where further buy stops might get activated. Selling could speed up should prices move below the nearby swing low at 204.85 where further sell stops might get triggered. With prices trading close to this year's high at 215.43, upside momentum could accelerate should the share be able to break out to new highs for the year.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Cummins. Out of 304 times, CMI closed higher 55.59% 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 53.62% with an average market move of 0.54%.