Insurance giant Travelers (TRV) may have reported disappointing numbers this morning, but its charts and indicators are looking ahead of this quarter and give us reasons to remain bullish.
The share price of Travelers has been tracking an upward trajectory for the past year and the past three years (see our charts below), so I favor the current trend and state of the indicators. If TRV was going to weaken, it would probably develop a top pattern first. Let's check the charts.
In this daily bar chart of TRV, above, we can see that the rising 200-day moving average line has defined the uptrend the past 12 months. There was a breakdown in October and November, but the positive pattern quickly resumed.
We can see a bullish golden cross to the 50-day moving average line and the 200-day moving average line in early January. TRV has crossed above and below the rising 50-day several times during corrections, but prices are currently above it.
Despite the short-term jiggles in price, the On-Balance-Volume (OBV) line has been strong since early November, telling us that buyers of TRV have been more aggressive than sellers, and dips in the OBV line have been shallow.
The trend-following Moving Average Convergence Divergence (MACD) oscillator just crossed to the upside below the zero line. This signal should be considered a cover shorts buy signal. A move back above the zero line will be an outright go long signal.
In this weekly bar chart of TRV, above, going back three years, we can see how the positive direction of the 40-week moving average line has defined the uptrend. TRV is currently above the rising 40-week average.
The weekly OBV line has had a positive slope over the past three years, and that tells us there has been good accumulation. The MACD oscillator on this weekly timeframe is above the zero line and looks poised for a fresh bullish crossover.
In this Point and Figure chart of TRV, above, we can see a durable uptrend going back to 2012. There is no top pattern visible, and a trade at $126 will be a fresh upside breakout and allow a potential price target of $159 to be projected.
Bottom line strategy: we might see some short-term selling, but the major trend is up. Traders looking to get long TRV should buy strength. Buy a close above $124 and add on a close above $126. Risk a close below $119 after buying. The $160 area is our price target for this bull run.