Conclusion, Investment Implications, Strategy

Aflac Incorporated (AFL) appears to be resuming its November 2020 major uptrend amid quarterly relative performance versus the benchmark S&P 500 (SPX).  A sustained rise above the $45.36 area would help confirm this and target an additional 15% rise to $55.00 per share.  This is an Asbury Momentum trade idea.

Analysis and Rationale

Aflac Incorporated (AFL), through its subsidiaries, provides supplemental health and life insurance products. It operates through two segments, Aflac Japan and Aflac U.S. The Aflac Japan segment offers cancer, medical, income support, and whole and term life insurance products, as well as WAYS and child endowment plans under saving type insurance products. The Aflac U.S. segment provides cancer, accident, short-term disability, critical illness, hospital indemnity, dental, vision, and term and whole life insurance products in the United States. It sells its products through sales associates, brokers, independent corporate agencies, individual agencies, and affiliated corporate agencies. The company was founded in 1955 and is headquartered in Columbus, Georgia.

The upper panel of Chart 1 below plots AFL daily since October 2020 along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies.  The lower panel displays a corresponding daily relative performance chart of AFL versus the benchmark S&P 500 (SPX, blue) along with its 63-day moving average (green, quarterly, our Strategic time period).

Chart 1

The colored highlights in the upper panel show that AFL appears to be resuming its November 2020 major uptrend, as defined by its 200-day MA, following successful tests of the 50-day MA on Jan 5th and Feb 5th.  Meanwhile, AFL’s current trend of quarterly relative outperformance versus SPX as shown in the lower panel also appears to be resuming following consecutive tests of it on those same dates.  A sustained rise above the 50-day MA, currently situated at $45.36, would help to confirm this and would target an additional 15% rise to $55.00 per share. 

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $46.13 area, a long entry price of $47.90 would provide a 1:4.0 risk/reward ratio (risking $1.00 to make $4.00) with an initial risk of 3.7%.

Table 1

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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.