We recently wrote about Chubb (CB) in an update comparing Chubb and American International Group (AIG):
"The daily chart of CB, above, tells a different story, with prices above the rising 50-day and 200-day moving averages. The OBV line is neutral. Momentum is slowing, but there's no bearish divergence in place...or just go long CB with a $115 sell stop."
Not much has changed since that update, but the On-Balance-Volume (OBV) line has continued lower and momentum has weakened. While I might continue to use a $115 sell-stop for investors I would use a $120 sell-stop for traders.
In this weekly chart of CB, above, we can see that prices are above the rising 40-week moving average line. The OBV line on this time frame has moved up a little from its January low. There is a bearish divergence, however, between the higher price highs seen in December and June and lower momentum readings. Despite the higher highs, the rate of price acceleration has slowed.
Bottom line -- with momentum diverging from the price action I have to be cautious on new CB longs and tighten sell-stops on existing longs.
