What Do Moving Averages Show for Insurance Stocks in XLF?



Moving averages

During the week ending March 24, the worst performers within the Financial Select Sector SPDR ETF (XLF) were Genworth Financial (GNW), Principal Financial Group (PFG), and Unum Group (UNM). They lost 9.5%, 4.3%, and 4.2%, respectively. Meanwhile, Progressive Group (PGR) and XL Group slightly outperformed the insurance stocks within XLF. They gained 1% and 0.9%, respectively.

As of March 24, Genworth Financial closed at $2.67. It trades 24.5% below its 100-day moving average, 9.4% above its 50-day moving average, and 2.8% above its 20-day moving average.

Meanwhile, Principal Financial Group closed at $38.9—10% below its 100-day moving average, 2.4% above its 50-day moving average, and 1.6% below its 20-day moving average. Unum Group closed at $30.8—3.2% and 0.9% below its 100-day and 20-day moving averages, but 6.1% above its 50-day moving average.

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Overall, insurance stocks are trading 0.9% below their 100-day moving averages. However, after the recent rally in the stock markets, these stocks are trading 4.5% and 0.7% above their 50-day and 20-day moving averages. While they still haven’t broken above their 100-day moving averages, 21 of the 22 insurance stocks are trading above their 50-day moving averages. This is seen as a bullish sign by technical analysts. Also, XLF is trading 2%, below its 100-day moving average, but 3.7% and 0.5% above its 50-day and 20-day moving averages, respectively.

Relative strength index

On average, the insurance stocks within XLF have a 14-day RSI (relative strength index) of 57. This suggests that they still aren’t overbought. Progressive and Marsh & McLennan have an RSI of 71 and 69, respectively. Currently, they’re overbought. Meanwhile, Principal Financial and MetLife (MET) have an RSI of 48 and 49, respectively. They might be undervalued.

The RSI is a technical momentum indicator used to determine overbought or oversold conditions. An asset is deemed to be “overbought” once the RSI approaches 70, meaning that it may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it’s an indication that the asset may be getting oversold. It will likely become undervalued.


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