SO dominated by bulls lifting the market higher throughout the day
Southern Company (SO) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
SO ended the week 3.88% higher at 54.58 after gaining $0.75 (1.39%) today on low volume, notably outperforming the S&P 500 (0.24%) ahead of tomorrow's Memorial Day market holiday. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (SO as at May 22, 2020):
Friday's trading range has been $1.04 (1.94%), that's far below the last trading month's daily average range of $1.59. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for SO. Prices continued to consolidate within a tight trading range between 53.56 and 55.32 where it has been caught now for the whole last trading week.
Two candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns. The last time a White Candle showed up on May 14th, SO actually lost -4.04% on the following trading day.
Prices are trading close to the key technical resistance level at 54.84 (R1). Southern was bought again around 53.58 after having seen lows at 53.69, 53.75 and 53.56 in the last three trading sessions. Obviously there is something going on at that level.
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying might accelerate should prices move above the close-by swing high at 55.32 where further buy stops could get activated. Selling might speed up should prices move below the nearby swing low at 53.56 where further sell stops could get triggered. As prices are trading close to May's high at 56.87, upside momentum might accelerate should the stock mark new highs for the month.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing Low" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for Southern. Out of 685 times, SO closed higher 56.06% 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 60.00% with an average market move of 0.45%.