LSTR breaks back below 50-day moving average
Landstar System Inc. (LSTR) Technical Analysis Report for Oct 27, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, LSTR ended Tuesday at 129.12 losing $2.38 (-1.81%), underperforming the Dow Comp. (-0.88%). The bears were in full control today, moving the market lower throughout the whole session. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (LSTR as at Oct 27, 2020):
Tuesday's trading range has been $3.16 (2.4%), that's slightly below the last trading month's daily average range of $3.51. Things look different on the weekly timeframe, where the market's trading range of the last week has been way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for LSTR. Prices continued to consolidate within a tight trading range between 127.86 and 132.74 where it has been caught now for the last three trading days.
Even with a strong opening Landstar System closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, two candlestick patterns are matching today's price action, the Bearish Hikkake Pattern and the Black Candle which are both known as bearish patterns.
Prices are trading close to the key technical support level at 126.48 (S1). The stock closed back below the 50-day moving average at 130.40 for the first time since October 21st. After having been unable to move lower than 128.68 in the previous session, the market found buyers again around the same price level today at 128.93. The last time this happened on October 15th, LSTR actually lost -2.96% on the following trading day.
Although still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Selling might accelerate should prices move below the nearby swing low at 125.67 where further sell stops could get activated.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Break through SMA 50" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for Landstar System. Out of 99 times, LSTR closed higher 61.62% 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 58.59% with an average market move of 0.60%.