TEX tanks $1.14 (-4.25%) after posting strong earnings
Terex Corporation (TEX) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
TEX finished the week 0.55% higher at 25.70 after tanking $1.14 (-4.25%) today on high volume, significantly underperforming the S&P 500 (0.18%) following Thursday's earnings report. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 26.33, Terex confirmed its breakout through the prior session low after trading up to $1.13 below it intraday.
Daily Candlestick Chart (TEX as at Feb 14, 2020):
TEX reported earnings of $0.36 per share after Thursday's market close. With analysts having expected an EPS of $0.18, Terex Corporation topped market expectations by 100.0%. The company's last earnings report was released on Oct. 30, 2019, when Terex Corporation reported earnings of $0.82 per share missing market expectations by -1.2%.
Friday's trading range has been $2.70 (9.68%), that's far above the last trading month's daily average range of $0.78. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for TEX.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Despite a strong opening the market 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.
After trading down to 25.20 earlier during the day, the share bounced off the key technical support level at 25.35 (S1). The failure to close below the support could increase that levels importance as support going forward. The stock closed back below the 20-day moving average at 26.25. When this moving average was crossed below the last time on February 6th, TEX lost -4.63% on the following trading day.
Though TEX is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
With prices trading close to this year's low at 25.05, downside momentum could accelerate should Terex break out to new lows for the year.
Among the 16 market conditions that our pattern recognition engine identified today, the statistics for the Stock Earning Report based market condition "Trading Day post strong Earnings Report" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for Terex. Out of 15 times, TEX closed higher 66.67% 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 46.67% with an average market move of 0.95%.