Relative Strength In Non-Bank Financials

JC Parets
August 3, 2019

Tuesday's Mystery Chart received a lot of responses, with most of you were erring on the long side.

Now, let's look at the chart and its related theme.

Here's SBI Life Insurance Company Ltd. attempting to break out above its post-IPO base while the more traditional "banking stocks" are being hit hard. Sure the price action is a bit choppy, but it's not going down like many other stocks in the sector and market.

Click on chart to enlarge view.

The reason this chart stood out to us is that the relative strength is obvious and suggests that these stocks will lead to the upside once the market gains its footing. As long as prices are above their recent lows of 732, the bias is to the upside towards 952.

Here's Can Fin Homes Ltd. attempting to clear a confluence of resistance near 390. While some consolidation is likely in the near-term, if prices can close decisively above 390, that would suggest further upside towards 495.

ICICI Prudential Life Insurance looks similar, however, we'd be waiting for a breakout above 420 to indicate a move towards 508 is likely.

HDFC Asset Management Co. broke out last month and quickly met our first upside objective near 2,375. If prices can get back above that level, then we can be long with a target near 3,065.

HDFC Life Insurance Co. is another great base. While it still has some work to do, a breakout above 540 would suggest the start of a new long-term trend and further upside towards 660.

Last but not least is ICICI Lombard General Insurance attempting a breakout to new all-time highs. Consolidation continues, but a breakout above 1,180 would suggest this uptrend is ready to continue towards 1,485.

Keep an eye on the Non-Bank Financial Services companies over the coming weeks. When the market starts to bounce, these stocks are likely to lead to the upside. More importantly, our risk is very well-defined.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

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