Outperforming Its Peers

PartnerRe Ltd. - PRE - close: 76.28 change: +0.01 stop: 69.75

Why We Like It:
The insurance sector has been trading sideways for months but it looks like PRE is breaking out after a four-month consolidation. The company just recently reported earnings that were significantly better than Wall Street's estimates. Revenues soared 29% and also beat expectations. The stock has been trading very technically. If you study the weekly chart you'll notice that the correction over the last four months has stalled and found support near the 50% retracement level. On the daily chart this coincides with the rising 200-dma. The breakout is a bullish breakout from its trend of lower highs, a breakout past its 50-dma and a breakout from an inverse head-and-shoulders pattern.

I am suggesting bullish call positions now. Unfortunately PRE doesn't have LEAPS so we'll have to use the 2010 August calls. Our first target is $84.90. Our second, longer-term target is $97.50. We'll use a stop loss at $69.75. More conservative traders might be able to get away with a stop closer to $71.50.

Company Info:

PartnerRe Ltd. (NYSE:PRE) is a provider of risk-assumption solutions for the global insurance and capital markets. We provide insurance companies with multiple lines of reinsurance — property & casualty, catastrophe, specialty lines, life, and alternative risk transfer — through our offices around the world. (source: company press release or website)

Use the 2010 August calls (Entry point - now, at current levels)

BUY CALL AUG 2010 $80.00 strike (PRE1021H80) current ask $2.70

Chart of PRE: