DE loses $2.10 (-1.47%) after posting strong earnings
Deere & Company (DE) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
DE finished the week 11.67% higher at 140.71 after losing $2.10 (-1.47%) today on high volume, significantly underperforming the S&P 500 (0.24%) following today's earnings report. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 141.07, the share confirmed its breakout through the prior session low after trading up to $2.31 below it intraday.
Daily Candlestick Chart (DE as at May 22, 2020):
DE reported earnings of $2.11 per share before today's market open. With analysts having expected an EPS of $1.75, Deere & Company topped market expectations by 20.6%. The company's last earnings report was released on Feb. 21, 2020, when Deere & Company reported earnings of $1.63 per share surpassing market expectations by 28.3%.
Friday's trading range has been $9.65 (6.52%), that's far above the last trading month's daily average range of $5.02. 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 DE.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. In spite of a strong opening the stock closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on Tuesday, DE actually gained 4.52% on the following trading day.
After trading down to 138.76 earlier during the day, the market bounced off the key technical support level at 139.29 (S1). The failure to close below the support could increase that levels significance as support going forward.
Although still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Stock Earning Report based market condition "Trading Day post strong Earnings Report" stand out. Though it is usually interpreted as neutral, it has actually shown to be bearish for Deere &. Out of 23 times, DE closed lower 60.87% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 56.52% with an average market move of -0.01%.