Insurance Titan in Overbought Position

Yesterday, we looked at a monthly chart of DR Horton Inc. noting the stock has been on a bullish run since March.

Today’s Chart of the Day is a Keltner Channel chart for Metlife, Inc. (NYSE: MET).

MetLife, Inc. engages in the insurance, annuities, employee benefits, and asset management businesses. It operates through five segments: U.S., Asia, Latin America, Europe, the Middle East and Africa, and MetLife Holdings. The company offers life, dental, group short- and long-term disability, individual disability, accidental death and dismemberment, vision, and accident and health coverages, as well as prepaid legal plans.

Now, the Keltner Channels serve as an overbought/oversold indicator. When the daily stock price is trading above the Upper Channel, it signals that the stock is overbought.

Stocks in a price uptrend do not advance in a straight line. There are always price retracements along the way. When a stock becomes overbought, it normally declines in price as the inevitable profit-taking occurs.

Below is a Daily Price Chart for Metlife, Inc. along with the three Keltner Channels (Upper, Middle, and Lower).

The MET chart shows that MET is in a strong price uptrend and recently became overbought many times as the stock traded above the Upper Keltner Channel (circled in blue).

As you can see, after trading above the Upper Channel in all scenarios, MET experienced a pullback — but the stock always continued to rally afterwards.

If you want to participate in this rally, where is the best place to enter?

We use the Keltner Channels to help us select a lower-risk entry point.

A Keltner Channel “Buy Zone” occurs when a stock is trading below the Upper Keltner Channel. Once the daily price is trading below the Upper Channel, it signals a buying opportunity.

If you had purchased MET shares when MET entered the “Buy Zone” around Sept 26th, you’d be up 10.93% on the stock by now.

Knowing that MET shares are continuing to rise, experience pullbacks, and rally again, we’ll be paying attention to future pullbacks in order to get in at the lowest entry point.

Maximizing Our Profit Potential

Additionally, we’d like to talk about how a previous Chart of the Day stock has done…

On January 6th, we highlighted Microsoft Corp. (NYSE: MSFT), noting that MSFT was in a strong bullish trend after making a series of 52-Week Highs since March.

If you happened to have purchased MSFT shares on that day, you’d already be up 5.46%.

But… if you had purchased the right option contract, you would be up 72.2% in just over two week’s time!

In fact, MSFT is one of our premium trading service’s long-standing recommendations. If you’d gotten into that position when we first sent it out, you’d be sitting on a 372.9% gain right now.

That’s why we hunt for these kinds of opportunities in PowerTrend Options. Choosing the right option can completely change your life.

In fact, that’s the whole thesis of that options service — the right trade has the power to set you on the path to living the life of your dreams.

But we know that some people like to walk before they run… and so we designed a class just for them, called the Thunderbird Options Course. Complete with syllabus, videos, and quizzes. Check it out if you haven’t yet!

Best Regards,

Chuck Hughes
Editor, Chart Of The Day

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