11Sep10:55 amEST

Out of the Woods, But Not in the Clear

I covered up the last piece of a Berkshire Hathaway short inside Market Chess Subscription Services late-last week, previously discussed on this blog, not necessarily because the technicals flipped bullish (they still look dicey, short-term, even for Berkshire) but partly due to the idea that the market has essentially "Sold the rumor" of Hurricane Irma, which may very well then set up a "buy the news" reaction if the storm turned out to be relatively non-catastrophic. 

And given the price action in the insurers this morning alongside the broad market rally, it sure seems that the buy-the-news move is in play. 

But that begs the questions of whether insurers are not fully out of the woods. 

As an example, consider the relevant UVE, based in southeast Florida's Fort Lauderdale. 

The daily chart, first below, shows the selloff last before Irma, with Friday serving as a reversal of sorts. However, also note all daily chart moving averages are now declining and firming above price. This suggests that rallies ought to be considered guilty until proven innocent, and likely will offer up a sound entry on the short side if the bounce runs out of steam in the $21/$23 range. 

The weekly chart, second below, shows UVE has been in a corrective pattern since 2015. At best, we are looking at a range here, with the bottom end holding now. However, that is a leap of faith at the moment for bulls, as we need to see more evidence to assume as much. 

Overall, insurers in the KIE ETF had a rough August after a prior, steep multi-quarter uptrend. The group seems to be at a crossroads of sorts, with a good many like UVE suffering technical damage beyond hurricane season jitters.

Much like the financials, bulls will want to keep a floor under these two sectors, at least, to prevent some broader market concerns from festering. 

Weekend Overview and Analysi... A Better Perspective


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