Conclusion, Investment Implications, Strategy

Loews Corporation (L) 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 $46.75 area would help confirm this and target an additional 15% rise to $57.00 per share.  This is an Asbury Momentum trade idea.

Analysis and Rationale

Loews Corporation (L) provides commercial property and casualty insurance in the United States and internationally. The company offers specialty insurance products, such as management and professional liability, and other coverage products; surety and fidelity bonds; property insurance products that include property, marine, and boiler and machinery coverages; and casualty insurance products, such as workers’ compensation, general and product liability, and commercial auto and umbrella coverages. It also provides loss-sensitive insurance programs; and warranty, risk management, information, and claims administration services. The company markets its insurance products and services through independent agents, brokers, and managing general underwriters. In addition, the company is involved in the transportation and storage of natural gas and natural gas liquids(NGLs), and hydrocarbons through natural gas pipelines covering approximately 13,650 miles of interconnected pipelines. Further, the company operates a chain of 27 hotels; and develops, manufactures, and markets a range of extrusion blow-molded and injection molded plastic containers for customers in the pharmaceutical, dairy, household chemicals, food/nutraceuticals, industrial/specialty chemicals, and water and beverage/juice segments, as well as manufactures commodity and differentiated plastic resins from recycled plastic materials. Loews Corporation was incorporated in 1969 and is headquartered in New York, New York.

The upper panel of Chart 1 below plots L 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 L versus the benchmark S&P 500 (SPX, blue) along with its 63-day moving average (green, quarterly, our Strategic time period).

Chart 1

The rightmost green highlights in the upper panel show that L appears to be resuming its November 2020 major uptrend, as defined by its 200-day MA, following a Feb 18th test of the 50-day MA.  Meanwhile, L’s current trend of quarterly relative outperformance versus SPX as shown in the lower panel also appears to be resuming a test of it on that same date.  A sustained rise above the 50-day MA, currently situated at $46.75, would help to confirm this and would target an additional 15% rise to $57.00 per share. 

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $47.28 area, a long entry price of $49.65 would provide a 1:3.1 risk/reward ratio (risking $1.00 to make $3.10) with an initial risk of 4.8%.

Table 1


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