By now, I'm sure you've seen the footage coming out of California... The fires raging around Los Angeles are terrible. And the videos of people, faces covered in soot, are tragic.
California's Fires Are Another Blow to the Insurance Industry
By Vic Lederman, editorial director, Chaikin Analytics
By now, I'm sure you've seen the footage coming out of California... The fires raging around Los Angeles are terrible. And the videos of people, faces covered in soot, are tragic. Residents are staying as long as they can to try to protect their properties. And as the flames encroach, they're taking videos with their cellphones. Firefighters are doing everything they can. But many fire hydrants in the area have run dry. And the fires have destroyed thousands of structures. Put simply, we're seeing the definition of "catastrophic loss." Obviously, the human toll is the most important. But as the fires rage, more eyes are turning to the insurance industry. Rebuilding will be costly. So today, let's take a look at the state of the insurance industry through the lens of the Power Gauge...
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Folks, the insurance industry has gotten a lot of negative press in the last few months... The recent shocking murder of UnitedHealthcare's CEO brought extreme scrutiny to the health insurance industry. It started a public conversation that most companies would prefer to avoid. Now the fires in California are raising questions about insurance and catastrophic loss. And it's coming at a time when the industry group is struggling in the market. We can see the struggles playing out in the Power Gauge with a "health check" of the insurance industry group. Right now, only 11% of names in this group earn a "bullish" or "very bullish" rating. That's a mere 13 out of 115 stocks. Meanwhile, 30 stocks in the group are rated "bearish" or worse. So there are more than twice the number of stocks in "bearish" territory than in "bullish" territory. Looking deeper, the group is also underperforming the broad market. Over the past month, the S&P 500 Index has fallen about 3%. But the insurance industry group fell about 5%. Worse still, only four stocks supported the group with any double-digit gains over the recent one-month period. And many of the insurance names heavily underperformed the overall group. What I find most concerning is that some of the industry's biggest names are hurting, too. Looking at the companies in "bearish" territory in the Power Gauge, I see names like Aflac (AFL) and Prudential Financial (PRU). Put simply, it's a rough time in the market for insurance stocks. And the fires in California are only going to add to the negative sentiment around this industry. Again, the human toll of this disaster is the most important. But as investors, we're also responsible for understanding the market around us. Today, the Power Gauge is clear... I'll be avoiding the insurance industry until it shows signs of a turnaround. And I recommend you do the same. Good investing, Vic Lederman
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.19%
10
10
10
S&P 500
+0.15%
57
255
184
Nasdaq
+0.02%
18
51
31
Small Caps
-0.45%
322
1110
470
Bonds
+0.13%
— According to the Chaikin Power Bar, Large Cap stocks are more Bearish than Small Cap stocks. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+2.78%
Health Care
+2.08%
Industrials
+0.8%
Information Technology
+0.58%
Communication
+0.46%
Utilities
+0.42%
Financial
+0.29%
Materials
+0.02%
Discretionary
-0.6%
Real Estate
-1.28%
Staples
-1.56%
* * * *
Industry Focus
Health Care Services
7
25
27
Over the past 6 months, the Health Care Services subsector (XHS) has outperformed the S&P 500 by +0.07%. However, its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #13 of 21 subsectors and has moved up 1 slot over the past week.
Indicative Stocks
ACHC
Acadia Healthcare Co
AGL
agilon health, inc.
USPH
U.S. Physical Therap
* * * *
Top Movers
Gainers
EBAY
+9.86%
BSX
+4.3%
KMX
+3.55%
MDT
+3.52%
GEHC
+3.47%
Losers
EIX
-10.18%
MRNA
-9.17%
ON
-7.05%
ENPH
-5.24%
SMCI
-5.15%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
DAL, WBA
STZ
No earnings reporting today.
Earnings Surprises
JEF Jefferies Financial Group Inc.
Q4
$0.95
Missed by $-0.09
RDUS Radius Recycling, Inc.
Q1
$-1.33
Missed by $-1.01
MSM MSC Industrial Direct Co., Inc.
Q1
$0.86
Beat by $0.13
* * * *
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