The Power Gauge Sees Upside Ahead for Insurance Stocks

Folks, we're getting a new and powerful signal from the market... It's the kind of signal that's worth looking into. [Chaikin PowerFeed]( The Power Gauge Sees Upside Ahead for Insurance Stocks By Joe Austin, senior analyst, Chaikin Analytics Folks, we're getting a new and powerful signal from the market... It's the kind of signal that's worth looking into. You see, the insurance industry has been great these days. That's because of three things.... • It's a seller's market for insurance... • The industry is getting a huge windfall from higher interest rates... • And it's facing regulation that has no teeth. That translates to a bull market for insurance stocks. In the Power Gauge, we can track this corner of the market with the SPDR S&P Insurance Fund (KIE). So far this year, it's about up 16%. Over the same time frame, the S&P 500 Index is up roughly 12%. KIE also outperformed recently as the markets got choppy. The S&P 500 peaked on July 16. Since then, it's down about 6%... while KIE is roughly flat. And as I'll explain today, more gains are likely ahead for this sector... Recommended Links: [The Great AI Bubble of 2024 – Is This it?]( America's favorite tech stocks just suffered their worst day in nearly 2 years. Is this the beginning of the end of the AI bull run? This 50-year Wall Street veteran weighs in on the threat of an AI bubble – and exactly what it means for your money in the days ahead. [Full story here](. [WHITNEY TILSON: 'Dozens of Popular Stocks Face Extinction']( One of Wall Street's most widely-followed investors has issued a chilling take on the markets. "This is not a garden-variety crash or correction. What we're witnessing is a collapse." And when it's through, dozens of popular stocks may no longer exist. [For the full story, click here](. As you've no doubt experienced firsthand, recent insurance price increases have been brutal. And they're sticking. Since 2022, auto-insurance rates are up almost 50%. That's 3 times the rate of inflation. Just from 2021 to 2023, the cost of homeowners insurance in the U.S. increased by about 20%. In disaster-prone areas, premium increases are up even more. And that's if you can still get coverage. Commercial property and casualty (P&C) rates are up 12% since 2020. Through the first quarter of this year, they've grown every quarter since December of 2017. That's a serious hit to any business's bottom line. And as you know, insurance is hard to give up... U.S. states require drivers to have some kind of auto insurance or proof of financial responsibility. If you want to get a mortgage, banks make you buy a homeowners policy. For folks and businesses thinking about cutting back, doing so is risky. Foregoing coverage can lead to financial disaster. So we all pay up. Then there are higher interest rates... Insurance companies operate on what they call the "float." This is the difference between money paid in by customers (the premiums) and money paid out by the company (the claims). Premiums come in all the time and get paid up front. Claims only get paid when they occur. In the meantime, insurers invest all that cash. For insurance companies, float is essentially an interest-free loan. And high interest rates mean they earn a better spread on that money. Last is the regulatory environment... States regulate insurance. Each state has its own commissioner or regulator. And if insurers don't like the way they're treated in a state, they leave. If a regulator tries to cap premium increases, insurers will stop writing policies. If losses from claims get too high, they'll exit the state. It's the free market at work. And right now, it's working in the industry's favor. Still, there are things to watch out for. Underwriting is always a factor. Last year, for every dollar the industry collected in home- and auto-insurance premiums, it paid out $1.10 in claims. That's not good. But a wild card here may be artificial intelligence ("AI")... Insurance companies are putting big money into it. They can use AI to analyze everything from claims data to weather patterns. The goal is to better gauge and price risk. If that happens, it would be a huge boost in productivity (and profitability) for the industry. With tailwinds like that, it's no surprise that KIE currently earns a "very bullish" rating from the Power Gauge. Our system tracks all 49 holdings in the fund. Right now, 26 of these are rated "bullish" or better. Meanwhile, none are rated "bearish." That's a great sign. But the Power Gauge is also sending us another important signal... Out of KIE's 23 holdings in "neutral" territory, 16 earn a "neutral+" grade. A "neutral+" rating means that most factors for the stock are "bullish." But the stock is trading below its long-term trend line. So its Technicals category in the Power Gauge isn't as strong as it could be. That means our system isn't ready to give it a "bullish" rating... but it's close. And looking at KIE as a whole, the takeaway is clear... With a "very bullish" rating in the power Gauge, insurance stocks look poised for gains ahead. Good investing, Joe Austin Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.16% 6 17 7 S&P 500 +0.41% 102 311 83 Nasdaq +0.52% 11 59 29 Small Caps -0.25% 482 1079 402 Bonds +0.99% — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain somewhat Bullish. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Industrials +1.26% Energy +1.14% Financial +0.76% Communication +0.55% Information Technology +0.41% Real Estate -0.12% Staples -0.14% Health Care -0.63% Utilities -0.82% Discretionary -1.03% Materials -1.64% * * * * Industry Focus Homebuilders Services 11 20 3 Over the past 6 months, the Homebuilders subsector (XHB) has outperformed the S&P 500 by +2.85%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #6 of 21 subsectors and has moved down 2 slots over the past week. Top Stocks [rating] GRBK Green Brick Partners [rating] DHI D.R. Horton, Inc. [rating] MHO M/I Homes, Inc. * * * * Top Movers Gainers [rating] AKAM +10.86% [rating] EXPE +10.21% [rating] LLY +5.49% [rating] PANW +4.45% [rating] TTWO +4.35% Losers [rating] PODD -8.81% [rating] INTC -3.81% [rating] LVS -3.14% [rating] EL -2.78% [rating] VTRS -2.64% * * * * Earnings Report Reporting Today Rating Before Open After Close FTRE No earnings reporting today. Earnings Surprises [rating] SATS EchoStar Corporation Q2 $-0.76 Missed by $-0.68 [rating] NFE New Fortress Energy Inc. Q2 $-0.41 Missed by $-0.47 [rating] SLVM Sylvamo Corporation Q2 $1.98 Beat by $0.40 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. 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