Everest Re Group Ltd. (RE) was upgraded today to a "Buy" by TheStreet's Quant Ratings service. Buys from quantitative filters get my attention but I like to combine that investment discipline with the charts and indicators.
In this daily bar chart of RE, below, we can see a steep selloff from July to September with prices skidding about $65 per share. Prices break below the 50-day moving average line and the 200-day line. The decline looks dramatic but look at the volume of shares traded and the movement of the On-Balance-Volume (OBV) line. Volume does not increase until early September and the OBV line is pretty steady from July to the end of October.
The lack of volume and the steady OBV line tells me that investors did not become sellers of RE. Prices bounced up into October and then slowly declined to retest the September low. RE has been firming again since November. Prices are above the now rising 50-day moving average line but still below the flattening 200-day line. The trend-following Moving Average Convergence Divergence (MACD) oscillator is crossing the zero line for an outright go long signal.
In this weekly bar chart of RE, below, we have some interesting technical signals. Prices are below the declining 40-week moving average line but a weekly close above $240 will change that situation. The weekly OBV line is rising and close to making a new high while the MACD oscillator is giving us a cover shorts buy signal.
In this Point and Figure chart of RE, below, we can see the support around $209.59 and a double top at $240.92. A $270.78 price target is shown.
Bottom line: Aggressive traders should look to buy RE in the $230-$220 area or on a close above $240. Risk a close below $218.