We’ve opened a bearish trade on MBIA Inc. (MBI). Using the Technical Opportunity Screener from Profit Scanner powered by Recognia, we’ve identified a bearish “symmetrical triangle” on MBI.
The symmetrical triangle pattern was completed on March 26, when MBI confirmed a close below the support level of the pattern.
Based on the pattern, we expect the stock to drop to a target price range of $8.00-$7.50 (as illustrated by the dark red bar in the image above).
Insurance companies have taken a hit recently, as investors have adjusted their expectations for higher interest rates. Although most traders are still expecting the Fed to raise rates this year, the magnitude of an interest rate hike has been reduced significantly. MBI is in a particularly sensitive position because of losses related to bonds defaults. Our initial price objective is $8.00 per share, but a break of support is certainly possible on any bad news.
‘Buy to open’ the MBI May 9 Puts (MBI150515P00009000) for a maximum price of $0.75.
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You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in their Advanced Technical Analysis Program.
