Stocks quoted in this article:
This morning, The Wall Street Journal
reported that insurance concern Allstate (ALL Ė 27-11/16) is set to unveil an alliance with home-improvement retailer Home Depot (HD Ė 50-1/4). The daily financial newspaper said that HD stores would provide products and services to ALLís homeowner-insurance policyholders, effectively saving the insurance company between 30 and 50 million dollars each year. If HD products are not available to an ALL policyholder, ALL officials will use HD prices as a baseline for purchasing the necessary supplies. Neither equity is reacting very strongly to this nugget of news, as HD is unchanged in late-morning trading, while ALL has given up a fraction. Investors have been in good hands with ALL shares of late, as the stock has muscled nearly 65 percent higher since early March. This has allowed the equity to surge above its 10-month moving average. ALL has not enjoyed a monthly close above this long-term trendline since June 1998. Still looming overhead, however, is ALLís descending 20-month moving average, which is perched just below the 32 mark. On the options front, speculator optimism has been on the rise along with ALLís share price. Since May 4, the Schaeffer's put/call open interest ratio (SOIR) for ALL has dropped from 0.51 to 0.34. The stockís present SOIR ranks lower than 91 percent of all readings over the past year. Should this optimism continue to swell, it could be a short-term concern for the shares. But as long as ALLís upward trend continues to flourish, it may not prove detrimental.