PZZA runs into sellers around 45.60 for the third day in a row
Papa John's International Inc. (PZZA) Technical Analysis Report for Aug 15, 2019 | by Techniquant Editorial Team
PZZA finished Thursday at 43.04 tanking $2.46 (-5.41%), notably underperforming the S&P 500 (0.25%). This is the biggest single-day loss in over a month. The bears were in full control today, moving the market lower throughout the whole session. Closing below Wednesday's low at 44.10, the market confirmed its breakout through the prior session low after trading up to $1.10 below it intraday.
Daily Candlestick Chart (PZZA as at Aug 15, 2019):
Thursday's trading range has been $2.60 (5.7%), that's far above the last trading month's daily average range of $1.56. 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 PZZA.
Regardless of a strong opening Papa John's closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Belt-hold and the Black Candle which are both known as bearish patterns.
The stock closed back below the 20-day moving average at 44.86 for the first time since August 7th. When this moving average was crossed below the last time on July 29th, PZZA lost -2.23% on the following trading day. The share ran into sellers again today around 45.60 for the third trading day in a row after having found sellers at 45.81 in the prior session and at 45.88 two days ago.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Selling could accelerate should prices move below the nearby swing low at 42.30 where further sell stops might get activated. Trading close to June's low at 41.52 we could see further downside momentum if potential sell stops at the level get triggered.
Among the 15 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Belt-hold" stand out. Its common bearish interpretation has been confirmed for Papa John's. Out of 24 times, PZZA closed lower 58.33% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 70.83% with an average market move of -1.45%.