HAL9000
Long

Play the referendum and the break above MA200: Buy.

MIL:G   GENERALI ASS
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5
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IMPROVING FUNDAMENTALS?
The consensus is lukewarm: Mild BUY with 10% target upside
But the yield (up) and market (up) environments have been improving
The Italian referendum is unlikely to impact materially this global insurer
Valuation remains compelling at <80% of book value

IMPROVING TECHNICALS
Clear support line formed since the summer - Current level 11.50
Yesterday attempted to break main resistance by closing > 12.20
Yesterday also closed above MA200 at 12.00 - Another positive sign
Looks slightly over-extended on short/mid term as it is trading at the hi bollinger band

LONG-TERM LONG
Stock price reference 12.16 (now)
Go long here with 13.00 and then 14.00 (+15%) targets
Stop-loss at 11.25 (-7.5%), just below the 11.50 support
RR 2x

Referendum fears: Trade half size before Sunday and another half after Sunday.

MORE CAUTIOUS INVESTORS: USE PUT OPTIONS
Selling 16dec16 Eur 11.50 puts brings in 0.21/share (yield 1.7% in 14 days or 44.45% per annum)
Selling 20jan17 Eur 11.50 puts brings in 0.37/share (yield 3.04% in 49 days or 22.62% per annum)


Comment: Italian government down
Brings equity markets down with it
Financial sector fears and concerns unchanged
But Euro implosion unlikely on the back of this vote
Generali looking good: Back to 12.20 resistance after initial weakness
Buy on any weakness if you traded half size on Friday
Comment: After initial weakness, Generali is showing renewed signs of strength. Currently confirming breakout over 12.20 and 12.50 (another key level) in good volume. Looking for close above 12.50 as confirmation of new uptrend.
Comment: The stock has now broken and closed above major levels to the upside. Those who went long on this recommendation should now be looking at the next target of Eur 14/share. Recommend buying more (increase position size by 20%) at the market (even if the stock looks slightly overbought at the current levels) and raising the stop-loss to 12.20 from 11.25. By doing so, your trade becomes all upside, no downside.
Trade active: Both targets at 13 and 14 have been reached, but this breakout configuration on Generali has turned very bullish. The stock has broken all resistances on high volume, which makes the move significant:
- Stay long
- Next target Eur 15.00/Share
- Increase position size by 20%
- Move stop loss up to Eur 13.10/Share
Trade active: After multiple breakouts on significant volume, Generali continues to act strong and is currently offering a potentially constructive high, tight flag (please see chart below). If broken to the upside, this current consolidation could bring added strength, at which point we would increase the trade size again. For now, we raise the stop-loss to 13.25, thereby insuring a gain of 9% on the position.

Comment: Options update: Deep in the money, let them expire and walk away with the premium. For added comfort and safety, buy back the 20jan'17 at $0.03/share to close the position and walk away with a $0.34/share.
Trade active: It was not long before the breakout happened from the high flag (updated graph below). Time to increase trade size by 20% and to raise the stop-loss to 13.50.

Trade active: Weakening momentum on European Insurance ahead or earnings and in the context of a consolidating market. We have reached our stop loss at 13.50. This was a nice trade but it is now time to take profits. Please see AXA for similar thread on European Insurance.
Trade closed: stop reached
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