Insurance Australia Group Drops

Insurance Australia Group Drops

id IAG perform worse than its track record and industry?

To limit the impact of variance in annual earnings, I deploy IAG’s best fit version of its past five-year average earnings growth. In the case of IAG, its trailing 12 month EPS decline of -2.95% is a below par performance when compared to the five-year average growth of 14.76%, pointing towards a change in the earnings growth momentum as it swung to negative. An underperformance against the long-term trend isn’t sufficient for me to judge whether IAG is facing a secular slowdown. To find that out, I’ll also compare its latest annual earnings performance with its industry’s average.

In the past year, IAG failed to outperform its own track record and its EPS growth of -2.95% also fell short of the Insurance industry’s earnings growth of 6.2%, raising questions about its ability to cash in on the broader upbeat trend.

Technical Analysis

Overall, the bias in prices is: Upwards.

Short term: Prices are stalling.

Intermediate term: Prices are ranging.

The projected upper bound is: 6.89.

The projected lower bound is: 6.34.

The projected closing price is: 6.62.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 23 black candles for a net of 1 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 38.9938. This is not an overbought or oversold reading. The last signal was a buy 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 45.31. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 26 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -118.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 8 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 16 period(s) ago.

Rex Takasugi – TD Profile

INSURANCE AUSTRA closed up 0.040 at 6.610. Volume was 29% below average (neutral) and Bollinger Bands were 3% narrower than normal.

Open   High    Low    Close   Volume
6.520   6.640  6.520  6.610   3,985,796

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period    50-period    200-period
Close:                       6.67              6.61              6.09
Volatility:                20                  27                 22
Volume:                  5,754,467     5,954,237    5,725,363

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

INSURANCE AUSTRA is currently 8.5% above its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of IAG.AX at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on IAG.AX and have had this outlook for the last 8 periods.

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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