Is Allstate Losing Its Grip to the Bears?

 | Feb 23, 2018 | 8:47 AM EST
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Allstate Corp. (ALL) looks like it is in weak technical hands. Prices have been declining this year and have broken below the rising 200-day moving average line. A deeper decline could unfold in the weeks and months ahead if the charts are any kind of road map.

In this daily bar chart of ALL, below, we can see that a downtrend has been established this year -- lower highs and lower lows. The 50-day simple moving average line has turned down and the cresting 200-day line has been tested and broken. Prices have bounced off chart support in the $90 area but ALL may not hold on the next test.

The daily On-Balance-Volume (OBV) line peaked in December and suggests that sellers of ALL have turned more aggressive with heavier trading volume being seen on days when ALL has closed lower. The Moving Average Convergence Divergence (MACD) oscillator moved below the zero line in January for an outright sell signal.

In this weekly bar chart of ALL, below, we can see the base and subsequent rally going back over the past three years. Prices bottom in 2015 and the weekly OBV started its rise. Prices and the OBV line look like they have peaked in the past three months. The rising 40-week moving average line has been broken and it looks like the rally to the underside of the line has failed. The weekly MACD oscillator gave a take profits sell signal in January.

In this Point and Figure chart of ALL, below, we can see a multi-year rise. The long-term trend may eventually resume but for now this chart is projecting a possible decline to the $81 area.

Bottom line: The good hands of ALL are slipping this year and we could see further weakness to around $80 if support around $90 gives way. Bounces, if they happen, should be contained by chart resistance in the $100-$105 area.

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