LH breaks below key technical support level
Laboratory Corporation of America Holdings (LH) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
LH finished the month 16.14% higher at 192.92 after losing $1.92 (-0.99%) today, strongly underperforming the S&P 500 (0.77%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (LH as at Jul 31, 2020):
Friday's trading range has been $5.53 (2.84%), that's slightly above the last trading month's daily average range of $4.90. 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 LH.
Prices broke below the key technical support level at 194.08 (now R1), which is likely to act as resistance going forward. The last time this happened on June 11th, LH actually gained 2.56% on the following trading day. After having been unable to move above 195.33 in the prior session, the stock ran into sellers again around the same price level today, missing to move higher than 195.09.
Although the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous High" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Laboratory. Out of 594 times, LH closed higher 57.24% 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 60.27% with an average market move of 0.63%.