Earnings season can be tough. There's nothing that derails technical setups faster, so when I see a strong chart like Unum Group (UNM), I have to note it comes with an asterisk, since it is set to report earnings this week.
The strong end to the week in terms of price action has sent many indicators into bullish affirmation. Not only did we see a bullish crossover in the MACD, but the push into bullish territory was extremely strong, and not just a small crossover. We also saw the Relative Strength Index (RSI) to just above 50 and then springboard higher.
The tough part is that very strong support is down around $35, but if you squint, you can see $36.20 as a recent support level before this last push.
The upside target here for the second half of 2015 looks to hover around $42 per share based on the last bounce and the current push.
The weekly chart is certainly the stronger draw on Unum. Price is pushing a small, rising wedge contained within a much larger wedge. While some do not like a strong RSI, I would prefer to see Unum push over 70 in terms of RSI.
We have a strong Slow Stochastics here that is basically in line with price. The %K (black line) should push over the %D (red line) in the next two weeks if this rally is going to continue.
One thing to note is the eight-day trading envelope at the plus and minus 6% level. Note how Unum has really closed below that level for the better part of two years now. That is about where I would be looking at a hard stop for longer-term positions.
If the stock breaks under $34, then I wouldn't be interested again until it tests and holds $31. I would be interested if the stock does test the lower range of the trading envelope, as buying at that level has created a great bounce trade for the last two years.
A weekly close over $38 should allow the stock to continue the current bullish run and find itself in the lower $40s. I have no interest shorting here, as this has been a sector ripe for consolidation and money flow. In times of raised stress, I prefer to follow the money, and Unum seems to be getting it here.