Tuesday, August 18, 2015

Crude Oil $USO Is Ready for a Quick Bounce

We have a classic contrarian setup in oil right now...
The price of oil has fallen 28% in just the past six weeks and is testing the $42-per-barrel low it hit back in March. Lots of analysts are looking for oil to fall even further over the next few months. And many of the financial television talking heads are looking for the price to dip into the $30s.
Oil has fallen so far, so fast... hardly anyone has anything bullish to say about it. Virtually everyone is rushing over to the "short" side of the boat.
But in the short term, I'm looking for a bounce. Here's why...(more)

CIGNA Corporation (NYSE: CI)

Cigna Corporation, a health services organization, provides insurance and related products and services in the United States and internationally. The company’s Commercial segment offers insured and self-insured customers medical, dental, behavioral health, and vision, as well as prescription drug benefit plans, health advocacy programs, and other products and services. Its Government segment offers Medicare Advantage plans to seniors in 16 states and the District of Columbia, Medicare Part D plans in 50 states and the District of Columbia, and Medicaid plans. The company’s Group Disability and Life segment provides group long-term and short-term disability insurance, group life insurance, and accident and specialty insurance. Its Global Supplemental Benefits segment offers supplemental health, life, and accident insurance products, as well as individual Medicare supplement plans that provide retirees with federally standardized Medigap-style plans. The company’s Run-off Reinsurance segment reinsures guaranteed minimum death benefits and guaranteed minimum income benefits plans. Its Other Operations segment provides corporate-owned life insurance that are permanent insurance contracts sold to corporations to offer life coverage; and operates the run-off settlement annuity business.

Take a look at the 1-year chart of Cigna (NYSE: CI) below with my added notations:
1-year chart of Cigna (NYSE: CI)
Over the past year CI has been trending consistently higher, while also forming a nice trend line of support (blue). Always remember that any (2) points can start a trend line, but it's the 3rd test and beyond that confirm its relevance. As you can see, the market deems this trendline to be very important. A pullback to that line will provide trading opportunities, one way or another.

The Tale of the Tape: CI has a trend line support to monitor. A long position could be entered on a pullback to the trendline, with a stop placed below the level of entry. A short position could be entered if CI were to break below its trendline.

Homebuilding Stocks Hitting New Highs, $DHI Leads

The stock market looks ahead and based on the latest breakout in homebuilding stocks (hitting new highs) ($DJUSHB), apparently traders like what they see on the horizon.  The 10 year treasury yield ($TNX) held key support and is bouncing.  Proceeds from the sale of treasuries seems to be finding a "home" in the DJUSHB.

 We spent more than a year consolidating in a bullish ascending triangle pattern, then broke out with a measurement to 710.

 Today's breakout above 600 will likely provide the impetus for another leg higher in the DJUSHB.  Also reflected on the chart below is bounce off support in the TNX and the recent breakout in DR Horton (DHI).  DHI recently reported better than expected revenue and earnings and action the past two days certainly improves its technical standing as well. 

“Alternative” Energy Now Competitive, Efficient. Marin Katusa