PPL finds buyers at key support level
PPL Corporation (PPL) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
PPL finished the week -1.83% lower at 35.36 after tanking $0.92 (-2.54%) today on high volume, significantly underperforming the S&P 500 (0.18%) following today's earnings report. This is the biggest single-day loss in over a year. Today's close at 35.36 marks the lowest recorded closing price since January 7th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 36.10, the share confirmed its breakout through the previous session low after trading up to $1.13 below it intraday.
Daily Candlestick Chart (PPL as at Feb 14, 2020):
PPL reported earnings of $0.57 per share before today's market open. With analysts having expected an EPS of $0.53, PPL Corporation beat market expectations by 7.5%. The company's last earnings report was released on Nov. 5, 2019, when PPL Corporation reported earnings of $0.61 per share hitting market expectations.
Friday's trading range has been $1.43 (3.93%), that's far above the last trading month's daily average range of $0.49. 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 PPL.
In spite of a strong opening the stock closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 34.97 earlier during the day, the market bounced off the key technical support level at 35.34 (S1). The failure to close below the support could increase that levels importance as support going forward. PPL closed below the 50-day moving average at 35.65 for the first time since September 9, 2019. When this moving average was crossed below the last time on September 6, 2019, PPL lost -1.48% on the following trading day. The share was sold again around 36.40 after having seen highs at 36.42, 36.44 and 36.41 in the last three trading sessions. Obviously there is something going on at that level.
Crossing below the lower Bollinger Band for the first time since October 8, 2019, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 36.24 or signal the beginning of a strong momentum breakout leading to even lower prices.
Although the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Among the 18 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous three Highs" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for PPL. Out of 17 times, PPL closed higher 52.94% 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 64.71% with an average market move of 1.34%.