Shares of insurance company Allstate Corp (NYSE:ALL) have spent the better part of 2015 in a consolidation period that increasingly looks ready to give way to a next upside leg. ALL stock currently has well-defined technical support and with the backdrop of an overall promising looking financial sector the path of least resistance is higher.
From a news flow perspective, the going has been light around Allstate Corp, and it will continue to be so — the next major scheduled event is the earnings announcement on May 5.
A good part of the profit picture at insurance companies and many financial companies depends on the steepness of the interest-rate yield curve, which remains on the flat side with the recent decline in rates.
This week, however, a host of banking giants — starting with JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) on Tuesday — are scheduled to report their latest quarterly results that (if investors take a liking to them) could provide a much-needed lift in the entire financial sector, which likely would in turn rally the broader stock market.
ALL Stock Charts
ALL stock in recent years has been a trend follower’s dream as its orderly ascent found support at every dip and ultimately in late 2014 broke past its 2006 highs and thus to fresh all-time highs. Very much like the broader stock market (as measured by the S&P 500), however, shares of Allstate in the bigger picture haven’t done much in 2015, though they are constructively consolidating their sharp multiyear rise above the 2006 highs (i.e., above the black resistance line).
From this perspective, barring any outside shock, the upside trend in ALL stock stands a good chance to resume higher.
On the daily chart, we see that the rise in ALL stock since last summer has taken place in a stair-step way where each consolidation period led to a next trend higher. We also note that the lows in each of the last three consolidation phases were quickly rejected at the rising 100-day simple moving average (blue line), which most recently again took place in early March.
Over the past few weeks, Allstate shares have again managed to move up to their year-to-date line of resistance around the $72.50 area. The longer ALL stock churns below this line of resistance while holding above its 100-day moving average, the better the chances of a release to the upside.
With some help of the broader financial sector — possibly from this upcoming earnings season — ALL stock could soon move past the $72.50 area, which could offer active investors an opportune spot to buy for a move into the high $70s.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
