Day three: trading QBE

Looking purely at the RSIs and stochastics, you can make an argument that QBE is grossly oversold and due a bounce.

The stock saw good buying yesterday off the low of $10.53 and the interesting part will be whether QBE can fill yesterday’s gap lower, by closing above $12.00.

This will be key and those looking at longs could set an initial target of $12.17, placing an initial stop on the trade below yesterday’s low.

Whether the stock has reached an inflection point is being widely talked about on the floors; at current levels I feel we have hit somewhat of a ‘fair value’, although we could see the stock oscillate $1 or so either side of current levels in the short term.

The more aggressive part of the investment community will be buying the stock now, believing the risks are reducing and that 10% insurance margins next year are not just achievable, but conservative.

Of course on the other side, the cynics will continue to believe that bad news follows bad news and that there is the possibility that we get a final clearing of the decks in Q1.

Given the current fundamental and technical picture, aggressive traders could look for a move to $12.17 for the stock to fill yesterday’s gap. However, I would look to cut longs on a break of yesterday’s low. It must be said this is a fairly risky trade and thus stops and limits are set tight.

QBE

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