The Allstate Corporation, together with its subsidiaries, engages in property-liability insurance and life insurance business in the United States and Canada. The company’s Allstate Protection segment sells private passenger auto, homeowners, and other property-liability insurance products under the Allstate, Esurance, and Encompass brand names. The company’s Allstate Financial segment provides traditional, interest-sensitive, and variable life insurance; and voluntary accident and health insurance products; deferred and immediate fixed annuities; and funding agreements backing medium-term notes; and retirement and investment products, including mutual funds, fixed and variable annuities, disability insurance, and long-term care insurance.
Take a look at the 1-year chart of Allstate (NYSE: ALL) below with added notations:
ALL started from a $55 low back in January and rallied from that low up to a $70 high in July. After that, the stock hit that $70 as resistance again, forming a solid 52-week high resistance at $70 (green). Yesterday, the stock broke through that level, which should lead to higher prices overall.
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The Tale of the Tape: ALL broke its 52-week resistance at $70. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A break back below $70 could negate the forecast for a move higher.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach