Insurance stocks are attracting a lot of new money into a reviving financial sector. Chart 1 shows the Dow Jones US Property & Casualty Insurance Index surging to the highest level in five years. Its relative strength line (below chart) is starting to break out to the upside. The main catalyst behind today's buying is coming from Travelers. Chart 2 shows Travelers (TRV) surging to a new record high. New records are also being hit by Ace and Chubb. As good as their performance is, many investors may shy away from buying them because they've already had a strong run. Fortunately, there's another insurance group that's starting to attract new money, but looks a lot cheaper.
About the author:John Murphy is the Chief Technical Analyst at StockCharts.com, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor.