Shares in this Dow component, The Traveler Companies (TRV³) have hung onto the strong gains of last Thursday, gaining on this Wednesday by a 'big' 2.4%, and though the stock declined yesterday by -0.1%, the five-day rate of change is a 'very large' 3.6%. The stock closed on Thursday at $49.72, below the 200, 100, and 50-day averages, but above the 20, 10, and 5 day averages, so it is still in the grips of the bear's claws in the longer term trend picture, but is gathering strength in the shorter term picture.

Q: How has TRV performed in the past when it has seen a 'very large' five-day percentage gain in the second quarter of the year, but the stock closes below its 200-day average price?

A: According to the 9 previous occurrences of this event, EventEdge indicates that TRV has shown a very strong bullish edge that peaks 31 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Thursday, 3 June 2010) is Friday, 16 July 2010. TRV rallies in 100% of the cases (9 of 9) by an average of 6.7% relative to the close on the event date. The overall return of the 9 cases is 6.7%, which, based on the close of TRV on the event date ($49.72), provides a target price of $53.05.

Let variable values:
@	=	GII.TRV.NYSE
theEvent	=	IF
   5 value percent_move of @  is more than
   (30 day average of 5 value percent_move of @   +
    (2 * 30 day std_dev of 5 value percent_move of @
    )
   )
AND
  @ is less than 200 value average of @
AND
  Date is second quarter
THEN 1
ENDIF


      Date   Day            t-5            t+5           t+10           t+20           t+31

04/27/1988   Wed            4.4            1.2           -1.8            0.6            8.5
06/24/1991   Mon            3.1            2.6            0.6            2.6            1.8
06/29/1994   Wed            4.2            0.6            0.0            4.6            9.2
04/23/1999   Fri            3.4           -5.6            8.6           14.6           12.1
05/07/1999   Fri           15.0            2.7            5.5            5.9            2.7
04/02/2001   Mon            9.4           -6.5           -3.5            2.3            9.0
04/27/2005   Wed            4.6            7.2            8.3            7.2           11.1
04/04/2006   Tue            3.9           -3.0            1.5            8.3            4.4
04/19/2006   Wed            4.6            1.8            6.6            3.7            1.9
06/03/2010   Thu            3.6            NaN            NaN            NaN            NaN

             Avg            5.6            0.1            2.9            5.5            6.7
          AvgPos            5.6            2.7            5.2            5.5            6.7
          AvgNeg            NaN           -5.0           -2.6            NaN            NaN
          PctPos          100.0           66.7           66.7          100.0          100.0
          PctNeg            0.0           33.3           22.2            0.0            0.0
         Maximum           15.0            7.2            8.6           14.6           12.1
         Minimum            3.1           -6.5           -3.5            0.6            1.8
          StdDev            3.7            4.4            4.5            4.2            4.1
           ZStat            1.5            0.0            0.6            1.3            1.7
        Variance           14.0           19.2           20.1           17.5           16.6


10 Occurrences

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Web Address of this trading idea:

http://www.markethistory.com/subscribe/best_of/content.html/16910.html

Links:

¹ http://www.lim.com
² http://www.markethistory.com/content/analog/analog.html?ticker=TRV
³ http://quote.morningstar.com/stock/s.aspx?t=TRV
⁴ http://www.markethistory.com/content/events/stocks/chart.html?ticker=TRV&events=UpBigVL5day0,BelowSMA2000,quarter&date=2010-06-03
⁵ http://www.markethistory.com/staff/detail.html?s=gibbons

The Traveler Companies - Poised for a Rally?

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