Admiral Group Insurance (LON:ADM) is to be admired for its prescient Admiral Multi Car cartoon character. See the graphic below. How did these people know Chris Evans was going to host Top Gear and opt to feature him?
Which rather lamely brings me to the point of this week’s chart.
I’ve had a couple of questions regarding Admiral's price movements this year as a few folk suspect they are seeing a head and shoulders formation making itself known this year.
I’ve boxed an area on the chart and, yes, if you half close an eye and turn the lights down, it is indeed possible to see a head and shoulders formation. But I’m not committed just yet.
The final part of the criteria needed will be for the share price to actually close below the fat red line, which is the immediate uptrend.
In the event of this happening (currently closure below 1,400p) it seems pretty probable the price could relax toward 1,256p if I employ usual H&S arithmetic.
But I wouldn’t bet against the uptrend since 2011 across the bottom of the screen providing some sort of bounce if it all comes to pass.
The funny thing is, I’m not exactly gloom laden just yet, despite the obvious pall Greece is throwing over the entire world markets.
As the chart shows, Admiral cheerfully broke above its long term downtrend earlier this year, echoing the wider market and giving some hope of good times ahead.
Since the start of May, when everyone remembered the Greek problem still existed, it’s all gone a bit awry. But I still want closure below red to convince me.
I do have a tiny little worry as the break above the long term downtrend should have taken the price to 1,682p if this was a full strength breakout. Alas, the highest achieved was a miserly 1,640p and I hate targets being approached but not beaten.
Obviously, any future movement on this share above just 1,522p can be expected to have another go at 1,682p. But I’ll admit there will be a sane argument suggesting holding out for a longer term 1,975p, which would represent a new all-time high for this share.
As market sectors go, Admiral sits in the non-life insurance grouping and this sector has been pretty well insulated from the vile calamity which fouled things royally in 2009. I’ve squeezed the long term targets at the top of the chart as they are obviously not drawn to scale.
Now, as it’s an insurer, how bad could it get?
If it does all go wrong - and the price manages to somehow close below 1,256p - my secondary longer term calculation is at 950p with worst case at 750p. This effectively matches the lows of 2009. Visually this seems unlikely at time of writing.
As usual, keep ‘em coming.
Alistair is the founder of www.trendsandtargets.com.