Prudential (PRU): Pre M&A Flushout?

It may be impossible to believe that there may be some readers of who are not familiar with the technical analysis classic, “101 Charts For Trading Success” published by a rather obscure former derivatives broker. In this tome there were at least a couple of gems. The main one however, may have been the observation that ahead of almost all M&A deals – most specifically 4-6 weeks before, there tends to be a final flushout / bear trap. According to the book, the inadvertant or possibly deliberate motivation behind such “shaking of the tree” is to ensure that anyone accidentally long of a stock ahead of say, a bid, will sell out / panic out. They would therefore miss out on the potential booty that lies ahead. pru


While there have been rumours associated with insurer Prudential since the dawn of time, and they may be as false now as they have always been, it can be seen on the daily chart that in the middle of July there was a brief bear trap dip towards 1,700p.


Today the stock was up just over 3%, something which is at least a vague sign that something may be going on here. Even if this is not the case, today witnessed a great key reversal to the upside, with a clearance of 1,840p likely to lead to the 1,960p May resistance zone relatively quickly.  Only back below 1,760p might suggest that we are looking at yet another false dawn.

Author: Zak Mir

Financial commentator, interviewer, technical analyst

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