SAM closes below its opening price unable to hold early session gains
Boston Beer Company Inc. (SAM) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
SAM finished Wednesday at 857.81 losing $16.57 (-1.9%) on low volume, significantly underperforming the S&P 500 (-0.46%). Trading $9.95 higher after the open, the stock was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (SAM as at Sep 16, 2020):
Wednesday's trading range has been $28.57 (3.27%), that's slightly above the last trading month's daily average range of $27.48. 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 SAM. Prices continued to consolidate within a tight trading range between 850.00 and 884.91 where it has been caught now for the last three trading days.
In spite of a strong opening the market closed below the prior day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on September 2nd, SAM lost -4.89% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 871.64 (now R1), which is likely to act as resistance going forward.
Although Boston Beer is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
With prices trading close to this year's high at 897.50, upside momentum could speed up should the share be able to break out to new highs for the year. As prices are trading close to September's high at 888.20, upside momentum might accelerate should SAM mark new highs for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Boston Beer. Out of 96 times, SAM closed higher 61.46% 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 63.54% with an average market move of 2.09%.