WSO breaks below Tuesday's low
Watsco Inc. (WSO) Technical Analysis Report for Sep 16, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, WSO finished Wednesday at 235.04 losing $1.21 (-0.51%), slightly underperforming the S&P 500 (-0.46%). Closing below Tuesday's low at 235.55, the share confirmed its breakout through the prior session low after trading up to $0.85 below it intraday.
Daily Candlestick Chart (WSO as at Sep 16, 2020):
Wednesday's trading range has been $4.69 (1.97%), that's slightly above the last trading month's daily average range of $4.57. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for WSO.
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. The last time this happened on September 10th, WSO actually gained 0.61% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Unable to break through the key technical resistance level at 238.78 (R1), Watsco closed below it after spiking up to 239.39 earlier during the day. The failure to close above the resistance might increase that levels importance going forward.
Though the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might accelerate should prices move below the close-by swing low at 231.64 where further sell stops could get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Down Close Near Low of Period" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Watsco. Out of 452 times, WSO closed higher 55.53% 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 62.83% with an average market move of 0.90%.