Insurance firm is a short-term sell

By Graeme Dickson
Updated: 12:32 EDT, 8 June 2011

Keep an eye on insurer Prudential (PRU) following the recent dead-cross in the company's share price as witnessed by the 20 day exponential moving average (red line) downwardly intersecting the 50 day exponential moving average (the yellow line) as can be seen below:

The stock is up almost 33 per cent in the last 52 weeks and if the market in general decides to give up some of the gains, Prudential will likely follow suit.

In the meantime, the company appears to be going from strength to strength given the recent interim management statement, showing a 17 per cent rise in first-quarter profit from new business sales, helped by a continued strong performance in Asia and the US while remaining upbeat about sales growth in coming years.

It has not all been plain sailing though as India placed a regulatory cap on charges paid on various insurance products, resulting in a 58 per cent drop in Indian sales.

The US markets are also expected to become more difficult as more competitors come back on stream.

Nonetheless, the charts are indicating that this is a short-term sell albeit probably a medium-term buy given the delivery and outlook. Expect support at 675p and through here down to 650p. On the upside expect resistance at 760-770p.

Update

Ashtead (AHT) – tipped as a sell at 182.8p, the stock closed at 176p yesterday, following awful employment figures in the US. Results are out next Thursday 16 June.

SThree (STHR) – tipped as a sell at 400p, it closed at 393.4p. Continue to hold for now.

Hochschild (HOC) – tipped as a sell at 515.5p, the shares closed at 488.5p. The Peruvian election has proved to be unhelpful for the shares and given the links the new leader Humala has to Chavez, there will be a degree of uncertainty as to how they are going to address the revenue generating mining companies. Continue to hold through this uncertain patch.

Premier Oil (PMO) – tipped as a sell at the equivalent of 480.25p, the shares closed at 480.2p. Continue to hold but cut the position if it closes above 503p.

QinetiQ (QQ.) - suggested to sell at 121.1p, the shares closed at 119.3p. Keep the stop to 121p.

Inchcape (INCH) – suggested to sell at 358.9p, the stock closed yesterday at 389.6p. Sit tight for now – if it closes above 415p, cut the position.

Smith & Nephew (SN.) – suggested to sell at 676.5p, the stock closed yesterday at 662.5p – the stock appears to be friendless after rivals made offers for others. Keep the stop based on a close above 700p.

Carpetright (CPR) – suggested to sell at 636p, the stock closed at 739p – surprising given the multitude of profit warnings but probably driven by short-sellers throwing in the towel. Watch out for resistance at 755-760p.

Aveva (AVV) – suggested to sell at 1591p, the stock should have been stopped at 1675p.

The writer does not hold any shares or derivatives in the above mentioned companies. The material for this report comes from Sharescope.