MHK unable to break through key resistance level
Mohawk Industries Inc. (MHK) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
MHK ended the week 8.64% higher at 137.98 after surging $5.34 (4.03%) today on high volume, strongly outperforming the S&P 500 (0.18%) following Thursday's earnings report. This is the biggest single-day gain in over three months. Closing above Thursday's high at 133.75, Mohawk confirmed its breakout through the prior session high after trading up to $8.86 above it intraday.
Daily Candlestick Chart (MHK as at Feb 14, 2020):
MHK reported earnings of $2.25 per share after Thursday's market close. With analysts having expected an EPS of $2.2, Mohawk Industries Inc. topped market expectations by 2.3%. The company's last earnings report was released on Oct. 24, 2019, when Mohawk Industries Inc. reported earnings of $2.75 per share topping market expectations by 5.0%.
Friday's trading range has been $14.60 (11.0%), that's far above the last trading month's daily average range of $3.83. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MHK.
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 stock managed to close back above the 200-day moving average at 134.56 for the first time since January 30th. When this moving average was crossed above the last time on January 15th, MHK gained 2.29% on the following trading day. Unable to break through the key technical resistance level at 141.28 (R1), the market closed below it after spiking up to 142.61 earlier during the day. The failure to close above the resistance might increase that levels importance going forward.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
With prices trading close to this year's high at 144.37, upside momentum could speed up should the share be able to break out to new highs for the year.
Among the 14 market conditions that our pattern recognition engine identified today, the statistics for the Stock Earning Report based market condition "Trading Day post strong Earnings Report" stand out. Though it is usually interpreted as neutral, it has actually shown to be bullish for Mohawk. Out of 23 times, MHK closed higher 69.57% 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 60.87% with an average market move of 1.41%.