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Insurance Revisited

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Last week it looked like insurance stocks were poised to fall, let's see where they're at now.

S&P Insurance Index Daily Chart

On 7/19 the S&P Insurance Index (IUX.X) closed just below support at 763, the 50% retracement bracket. Over the next four days IUX lost over 3%. In the process, the index dropped below the 200- day moving average, and 38.2 retracement bracket at 740. 740 was also the neckline of a head and shoulders bottom, and should have offered some better support than it did. The MACD is picking up some downside momentum, and 705 could be in the future.

Progressive Daily Chart

So if the Insurance Index is tanking, what the $#%! is up with Progressive (NYSE:PGR)? The stock had the same chart characteristics as the index, but refuses to break down. Price is below the 50-day moving average, but can't drop below 128. If it ever does drop, 116 still looks like a reasonable target. The MACD has dropped below the zero line, but almost looks like it wants to roll up. If the PGR climbs above resistance at $131, the MACD may indeed roll up, and signal that this stock isn't going to drop with the rest of the insurance stocks. I doubt it will set a new high any time soon, but it may just consolidate between $128 and $136 until it decides which way it wants to go.

Jeffrey Canavan
Assistant Analyst

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