CVS closes above its opening price after recovering from early selling pressure
CVS Caremark Corp. (CVS) Technical Analysis Report for Oct 12, 2018
CVS finished the week -5.2% lower at 74.58 after gaining $1.39 (1.9%) today, slightly outperforming the S&P 500 (1.42%). Trading up to $1.24 lower after the open, CVS Caremark managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (CVS as at Oct 12, 2018):
Friday's trading range has been $1.70 (2.28%), that's slightly above the last trading month's daily average range of $1.47. 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 CVS.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, four candlestick patterns are matching today's price action, the Bullish Harami Cross Pattern, the Southern Doji and the Takuri Line which are known as bullish patterns and one neutral pattern, the Doji. The last time a Bullish Harami Cross Pattern showed up on July 5th, CVS gained 2.14% on the following trading day.
Prices are trading close to the key technical support level at 72.92 (S1). Unable to break through the key technical resistance level at 74.90 (R1), the market closed below it after spiking up to 74.97 earlier during the day. The failure to close above the resistance could increase that levels importance going forward.
With another close below the lower Bollinger Band, prices are confirming their strong downward momentum in the short-term. A rally back into the Bollinger Band on the next trading day while might signal a potential change in momentum that could lead to a correction back up towards the center of the Bollinger Bands at 78.48.
Though the share is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Southern Doji" stand out. Its common bullish interpretation has been confirmed for CVS Caremark. Out of 60 times, CVS closed higher 65.00% 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 63.33% with an average market move of 0.50%.