DFS crashes $9.56 (-11.14%) after posting strong earnings
Discover Financial Services (DFS) Technical Analysis Report for Jan 24, 2020 | by Techniquant Editorial Team
DFS ended the week -9.65% lower at 76.29 after tanking $9.56 (-11.14%) today on high volume, notably underperforming the S&P 500 (-0.9%) following Thursday's earnings report. This is the biggest single-day loss ever recorded for Discover Financial. Today's close at 76.29 marks the lowest recorded closing price since October 9, 2019. Trading $1.07 higher after the open, the share was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on Tuesday, DFS actually gained 1.98% on the following trading day. Ending with a weak close near the low of the day sets a bearish note for the next session.
Daily Candlestick Chart (DFS as at Jan 24, 2020):
DFS reported earnings of $2.25 per share after Thursday's market close. With analysts having expected an EPS of $2.24, Discover Financial Services beat market expectations by 0.4%. The company's last earnings report was released on Oct. 22, 2019, when Discover Financial Services reported earnings of $2.36 per share surpassing market expectations by 4.0%.
Friday's trading range has been $3.19 (4.08%), that's far above the last trading month's daily average range of $1.19. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for DFS.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 74.85 (S1). The stock closed below the 200-day moving average at 81.27 for the first time since October 8, 2019.
Crossing below the lower Bollinger Band for the first time since January 7th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 83.49 or signal the beginning of a strong momentum breakout leading to even lower prices.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Among the 19 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "RSI(14) below 30" stand out. Its common bullish interpretation has been confirmed for Discover Financial. Out of 22 times, DFS closed higher 68.18% 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 63.64% with an average market move of 1.07%.