L breaks below key technical support level
Loews Corporation (L) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, L ended the week 7.04% higher at 31.91 after edging lower $0.18 (-0.56%) today on low volume, underperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (L as at May 22, 2020):
Friday's trading range has been $0.97 (3.01%), that's below the last trading month's daily average range of $1.34. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for L. Prices continued to consolidate within a tight trading range between 31.05 and 32.46 where it has been caught now for the whole last trading week.
Even with a strong opening the market closed below the prior day's open and close, forming a bearish Engulfing Candle.
After trading as low as 31.31 during the day, the stock found support at the 20-day moving average at 31.47. The last time this happened on April 20th, L actually lost -3.60% on the following trading day. Prices broke below the key technical support level at 32.09 (now R1), which is likely to act as resistance going forward. The share ran into sellers again today around 32.28 for the third trading day in a row after having found sellers at 32.46 in the previous session and at 32.44 two days ago.
Though Loews is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might accelerate should prices move above the nearby swing high at 32.46 where further buy stops could get triggered. Selling might speed up should prices move below the close-by swing low at 31.05 where further sell stops could get activated. As prices are trading close to May's high at 33.89, upside momentum might accelerate should L mark new highs for the month.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Loews. Out of 102 times, L closed higher 54.90% 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 60.78% with an average market move of 0.32%.