VSTM dominated by bears dragging the market lower throughout the day
Verastem Inc. (VSTM) Technical Analysis Report for Jul 13, 2020 | by Techniquant Editorial Team
VSTM ended Monday at 1.32 tanking $0.13 (-8.97%), notably underperforming the S&P 500 (-0.94%). This is the biggest single-day loss in over two weeks. The last time we've seen such an unusually strong single-day loss on July 7th, VSTM actually gained 2.00% on the following trading day. Today's close at 1.32 marks the lowest recorded closing price since January 7th. The bears were in full control today, moving the market lower throughout the whole session. Closing below Friday's low at 1.44, the share confirmed its breakout through the prior session low after trading up to $0.14 below it intraday.
Daily Candlestick Chart (VSTM as at Jul 13, 2020):
Monday's trading range has been $0.15 (10.34%), that's far above the last trading month's daily average range of $0.11. 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 VSTM.
Three candlestick patterns are matching today's price action, the Bullish Hikkake Pattern and the Last Engulfing Bottom Pattern which are both known as bullish patterns and one bearish pattern, the Black Candle.
Crossing below the lower Bollinger Band for the first time since July 9th, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 1.69 or signal the beginning of a strong momentum breakout leading to even lower prices.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
With prices trading close to this year's low at 1.23, downside momentum could speed up should the market break out to new lows for the year.
Among the 12 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "RSI(14) below 30" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for Verastem. Out of 37 times, VSTM closed lower 51.35% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after seven trading days, showing a win rate of 59.46% with an average market move of -1.82%.