Shares of insurance company Aflac Incorporated (NYSE:AFL) have rallied nicely since early February and outperformed along with the financial sector as a whole. Now, AFL stock now looks positioned to push higher over the next few months, particularly if interest rates will be on the rise.
When Aflac reported fourth-quarter financial results on Feb. 3, results came in line with analyst expectations, and the company both reaffirmed guidance for 2015 and announced a cash dividend of 39 cents per share. AFL stock released higher as a result and has been acting constructively ever since.
Like many insurance and financial companies, AFL stock favors a steepening interest-rate yield curve, which is at least part of the reason for Aflac’s ascent since early February.
AFL Stock Charts
Looking at the multiyear weekly chart, AFL stock continues holding its uptrend line from the 2009 lows and also has an equally well-defined line of resistance to deal with (i.e., its 2008 and 2013 highs).
Like many stocks, 2014 was a year of consolidation for AFL, and unless the 2009 support line gets broken, Aflac remains in a very constructive posture that should see it break above the 2008/2013 highs in the not-so-distant future. Another way of looking at the price action in 2014 is as “coiling up” or “churning” below the multi year horizontal resistance line, which again is bullish in nature and would point to an eventual breakout move higher.
Moving over to the daily chart below, we see that since AFL stock bottomed out last October with the V-shaped bullish reversal in the broader market, it has worked its way higher in a stair-step fashion with an important higher low in December/February. By early February, AFL had overcome its 200-day moving average again on a more sustainable basis for the first time since early 2014, and now Aflac has found horizontal resistance from last summer’s highs around the $64 area.
The price action over the last couple of weeks has also pushed AFL stock out of the 2014 consolidation pattern (black parallels on the above chart) and now has a well-defined upside target near $68 in mind — yes, that’s the 2008 and 2013 highs.
In the immediate term, AFL stock could use a little breather, but ultimately a push past the $64 area on a daily closing basis would be a constructive sign that shares can move toward the $68 area (and beyond).
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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.
