Hartford Financial (HIG) Takes a Small First Step to Big Bearish Move
The news was probably irrelevant; the market had most likely already decided to sell Hartford Financial Services (NYSE: HIG) anyway, and the announcement was simply the catalyst. Either way, the damage is done, and what appears to be a small blip for HIG today may actually be the beginning of something much more painful.
Upon closer inspection of the chart for Hartford Financial Services, it's not hard to see that there's been technical support around $23.15 since October of last year. That floor was tested seven times over the last four months, with the most recent test ending in failure - HIG is currently trading at $22.73 (which also sits under a key Fibonacci line, not shown).
Though it's only a small move today, the fact that support is no longer in place means the stock will be easy for the bears to send lower.
Target-wise, there's not another significant bottom for the stock until $10.00, though the odds of a pullback that big are slim. There's another Fibonacci line at $17.50, which also lines up with a moderately-meaningful support area.
This bearish setup from Hartford could bear some profitable fruit with a short position on the stock, but the risk/reward ratio with an in-the-money option could offer a commensurate risk/reward ratio. At $3.50, the June 24 puts are attractively priced, yet also offer pretty strong delta.
