VMI breaks back below 20-day moving average
Valmont Industries Inc. (VMI) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
VMI finished Wednesday at 125.58 losing $0.89 (-0.7%) on high volume, slightly underperforming the S&P 500 (-0.46%). 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 (VMI as at Sep 16, 2020):
Wednesday's trading range has been $1.99 (1.57%), that's below the last trading month's daily average range of $2.67. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for VMI.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar.
The share closed back below the 20-day moving average at 126.06.
Though the stock 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 its 50-day moving average crossing above its 200-day moving average, Valmont has entered a so-called "Golden Cross" for the first time since March 17th. Showing increasing upward momentum in the short and medium-term the "Golden Cross" is known to indicate a potential bull market on the horizon. When the last "Golden Cross" happened on August 9, 2019, VMI actually lost -2.18% on the following trading day.
Buying could accelerate should prices move above the nearby swing high at 127.35 where further buy stops might get activated.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Golden Cross" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for Valmont. Out of 5 times, VMI closed lower 60.00% of the time on the next trading day after the market condition occurred.