LUV closes higher for the 2nd day in a row
Southwest Airlines Company (LUV) Technical Analysis Report for May 15, 2019 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, LUV finished Wednesday at 52.01 gaining $0.36 (0.7%), slightly outperforming the S&P 500 (0.58%). Closing above Tuesday's high at 51.94, the stock confirmed its breakout through the prior session high after trading up to $0.50 above it intraday.
Daily Candlestick Chart (LUV as at May 15, 2019):
Wednesday's trading range has been $1.73 (3.39%), that's far above the last trading month's daily average range of $1.12. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for LUV. Prices continued to consolidate within a tight trading range between 50.71 and 52.88 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bullish Outside Bar. The last time this happened on May 10th, LUV actually lost -3.22% on the following trading day. Notwithstanding a weak opening the share managed to close above the previous day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
Buyers managed to take out the key technical resistance level at 51.78 (now S1), which is likely to act as support going forward. After spiking up to 52.44 during the day, the market found resistance at the 100-day moving average at 52.30. Southwest Airlines found buyers again today around 50.71 for the third trading day in a row after having found demand at 50.90 in the prior session and at 50.78 two days ago.
While still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Buying could accelerate should prices move above the nearby swing high at 52.88 where further buy stops might get triggered.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Bounce off SMA 100" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Southwest Airlines. Out of 13 times, LUV closed higher 53.85% 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 61.54% with an average market move of 0.16%.