SAFM closes below its opening price unable to hold early session gains
Sanderson Farms Inc. (SAFM) Technical Analysis Report for Sep 18, 2019 | by Techniquant Editorial Team
SAFM finished Wednesday at 154.60 losing $1.21 (-0.78%) on low volume, underperforming the S&P 500 (0.03%). Trading $1.56 higher after the open, the share was unable to hold its gains as the bears took control ending the day below its opening price. The last time this happened on September 6th, SAFM lost -3.88% on the following trading day. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (SAFM as at Sep 18, 2019):
Wednesday's trading range has been $4.27 (2.74%), that's slightly below the last trading month's daily average range of $5.44. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for SAFM.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top.
Prices are trading close to the key technical support level at 153.00 (S1). Prices are trading close to the key technical resistance level at 158.32 (R1). After having been unable to move above 158.22 in the prior session, the stock ran into sellers again around the same price level today, missing to move higher than 157.47.
Though Sanderson Farms is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might speed up should prices move above the close-by swing high at 158.22 where further buy stops could get activated. With prices trading close to this year's high at 158.32, upside momentum might accelerate should the market be able to break out to new highs for the year.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous High" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Sanderson Farms. Out of 589 times, SAFM closed higher 54.84% 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 57.89% with an average market move of 0.92%.