DISCA plunges -4.04% on high volume
Discovery Inc. Series A Common Stock (DISCA) Technical Analysis Report for Aug 05, 2020 | by Techniquant Editorial Team
DISCA ended Wednesday at 21.12 tanking $0.89 (-4.04%) on high volume, strongly underperforming the S&P 500 (0.64%) following today's earnings report. This is the biggest single-day loss in over three weeks. The last time we've seen such an unusually strong single-day loss on July 9th, DISCA actually gained 5.09% on the following trading day. The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 21.30, Discovery confirmed its breakout through the previous session low after trading up to $0.24 below it intraday.
Daily Candlestick Chart (DISCA as at Aug 05, 2020):
DISCA reported earnings of $0.77 per share before today's market open. With analysts having expected an EPS of $0.76, Discovery Inc. Series A Common Stock surpassed market expectations by 1.3%. The company's last earnings report was released on May 6, 2020, when Discovery Inc. Series A Common Stock reported earnings of $0.87 per share failing market expectations by -2.2%.
Wednesday's trading range has been $1.94 (8.43%), that's far above the last trading month's daily average range of $0.86. 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 DISCA.
In a volatile session, prices traded above the prior day's high as well as below the previous day's low, forming a bearish Outside Bar. Despite a strong opening the share closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Belt-hold and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical support level at 21.04 (S1). The market closed back below the 100-day moving average at 21.26.
Although the stock is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Selling might accelerate should prices move below the close-by swing low at 20.55 where further sell stops could get activated.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Belt-hold" stand out. Its common bearish interpretation has been confirmed for Discovery. Out of 22 times, DISCA closed lower 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 short side has been after 10 trading days, showing a win rate of 68.18% with an average market move of -1.67%.