Top Insurance Stocks: Trading Opportunities For Next Week

A security pattern traces the distinct movements of security prices that, once recognized, help traders to make informed trading decisions. These patterns are identified by their vital geometrical elements, which are formed by changing security prices. Let's look at some insurance stock opportunities by analyzing these patterns.

Buy Signal for United Fire Group (UFCS(Head-and-Shoulders Bottom)

The bullish head-and-shoulders bottom is the opposite image of a bearish head-and-shoulders. It has all the same parts—two shoulders, a neckline, and the head. Only instead of the shoulders and head being formed at high points for the stock, they are formed at low points.

The investor psychology is the opposite of the bearish pattern. The stock is falling and hits a temporary low to form the left shoulder before a bounce occurs and forms the left side of the neck. The upward momentum is temporary, and the next down leg takes the stock lower than the left shoulder and forms the head.

Investors jump in, thinking the new low is a buying opportunity, but then start taking profits after a decent run up to the neckline. The profit-taking creates the next down leg, but investors start buying on this third down leg before it gets down to the previous low. This forms the right shoulder and starts the next upward move.

Now, the momentum is to the upside and the buying pressure sends the stock above the neckline. At this point, the pattern is confirmed. After breaking above the neckline, the upward momentum is likely to continue, and the stock price keeps moving higher.

Trade Idea:

  • Buy near the breakout (entry) price – $27,91.
  • Sell at the target (exit) price – $29,22.

Buy Signals for Kemper Corp. (KMPR), Reinsurance Group of America (RGA), & Enact Holdings (ACT)

Trade Idea:

  • Buy at the opening of the stock market on Monday if the opening price has gone up by no more than 0.5% of Friday's closing price.
  • Sell after the price has risen by 2% from Friday's closing price, or at the end of the trading week if the target is not reached.

Buy Signal for Unum Group (UNM)

Trade Idea:

  • Buy UNM at the current market price if seen as appealing.
  • Sell UNM after receiving the "sell" recommendation from trusted analyses.
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