MCO finds support at 50-day moving average
Moody's Corporation (MCO) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MCO ended the month 2.39% higher at 281.30 after losing $2.47 (-0.87%) today on high volume, strongly underperforming the S&P 500 (0.77%). Today's close at 281.30 marks the lowest recorded closing price since July 2nd. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (MCO as at Jul 31, 2020):
Friday's trading range has been $8.66 (3.03%), that's above the last trading month's daily average range of $6.88. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for MCO.
One bullish candlestick pattern matches today's price action, the Last Engulfing Bottom Pattern.
After trading as low as 276.72 during the day, Moody's found support at the 50-day moving average at 278.68. Prices broke below the key technical support level at 282.08 (now R1), which is likely to act as resistance going forward. The last time this happened on June 24th, MCO actually gained 4.01% on the following trading day.
Though the share is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
With prices trading close to this year's high at 296.66, upside momentum might accelerate should the stock be able to break out to new highs for the year. As prices are trading close to July's low at 273.97, downside momentum could speed up should the market mark new lows for the month.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Moody's. Out of 281 times, MCO closed higher 60.14% 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 62.99% with an average market move of 1.51%.