I spend a lot of time looking at stock screens on the hunt for stocks to bring to my readers attention. I came across Genworth Financial (GNW), a company that I know very well and like. Both my wife and I have some very affordable term life insurance through them. I get my bill every year and am happy to pay. I can brag a little that I was in such good health that I got super preferred rates. It must be all that soccer I play and chasing after my four kids!
Genworth has been posting losses for the last 4 quarters, but their balance sheet is healthy enough. The sentiment on GNW is mostly bullish. They have survived the mortgage meltdown and dealt well with decreased revenues due to market conditions. However, their chart indicates that the stock may be overheating and could drop in the near term. I believe that the general slope of price action will be positive over the weeks and months to come, but the near term is a different thing.
Here is their chart:
You can see from the chart that GNW has had trouble breaking through the $7 dollar resistance range. The stock is being accumulated and it appears from the Stochastics that it is close to being oversold. It is not quite there, but this is a radar stock. i.e. keep it on the radar and if it continues to chart like this get ready to short. Be aware that the MACD has crossed and is above the zero line, but that may only add more heat to an already overheated stock.
Is shorting GNW the only play? No! It might be a good stock to buy on dips. It has shown great elasticity in the past few months trading several times between $5 and $7. If you do short, keep tight stops on it. In this general market climb, it might surprise and keep advancing. However, I think that the market will correct in the near term anyway which might give added impetus to a sell-off of the stock.
Good luck and Good Trading
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