SAFM breaks below key technical support level
Sanderson Farms Inc. (SAFM) Technical Analysis Report for Jul 16, 2019 | by Techniquant Editorial Team
Moving lower for the 4th day in a row, SAFM ended Tuesday at 129.82 tanking $5.23 (-3.87%), notably underperforming the S&P 500 (-0.34%). This is the biggest single-day loss in over four weeks. Today's close at 129.82 marks the lowest recorded closing price since April 4th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Monday's low at 132.11, the market confirmed its breakout through the prior session low after trading up to $2.35 below it intraday.
Daily Candlestick Chart (SAFM as at Jul 16, 2019):
Tuesday's trading range has been $5.43 (4.03%), that's far above the last trading month's daily average range of $3.80. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for SAFM.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 127.50 (S1). Prices broke below the key technical support level at 132.55 (now R1), which is likely to act as resistance going forward. After having been unable to move above 135.25 in the previous session, Sanderson Farms ran into sellers again around the same price level today, missing to move higher than 135.19. The last time this happened on July 11th, SAFM lost -1.14% on the following trading day.
Though still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Further selling might move prices lower should the market test June's close-by low at 127.51.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Very Strong Down Move" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Sanderson Farms. Out of 121 times, SAFM closed higher 52.89% 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 59.50% with an average market move of 1.14%.