Intact Financial Corp. - (IFC.TO) - August 26, 2024

Intact Financial Corp. (IFC.TO), the largest provider of property and casualty insurance in Canada, a leading provider of global specialty insurance, and a leader in commercial lines in the UK and Ireland, is now in the crosshairs of SIA Practitioners. Let's look at the shares of IFC.TO to understand what makes this insurance provider such a darling on the Canadian stock market. Currently ranked #14 in the SIA S&P-TSX 60 Index Report, shares of IFC.TO are now favored but have generally been average performers, spending a lot of time in the Yellow Neutral Zone. Of late, shares have re-entered the Favored Green Zone and are beginning to lead the market once again. While this average performer does have moments of glory in the Favored Green Zone, it does not spend any time in the Unfavored Red Zone, which is not typical. These periods of underperformance can have a devastating effect on returns, which is why our rules-based methodology excels in two main ways. First, it ensures that we are in the outperforming sectors and stocks to harvest optimal alpha. Second, and perhaps most importantly, it keeps practitioners out of the ditch and away from the underperforming areas. Intact Financial is an excellent example of a company with an average-performing stock that continues to grow week by week. Investors have been rewarded with very little volatility, enjoying a beta of 0.31 and capital gains as the shares have rallied from just over $100 to $250 in the past 5 years. The big story on the candlestick chart is one of support, as the share price shows little pulses of gains followed by consolidations, producing excellent support levels. Recently, the shares rallied above the $200 whole number resistance level in early 2024, moving up to $230. After another brief pause, the shares began to rally once more, reaching current levels. Risk-reward parameters on entry would certainly improve with any pullback in the share value, with initial support at $230, significant support at the $210-$200 level, and even more at just below $190 in a market correction scenario.

The point-and-figure chart always helps provide more intelligence on exact support and resistance and does a better job of showing the precise positions of breakouts. In the attached chart, the support level at the whole number $200 is clear, with a massive spread quadruple top breakout in early 2024 followed by a descending consolidation formation in the spring and summer. The breakout at $228.64 completed this consolidation to the upside, with a further bullish confirmation at $235.57 as buyers took control with another spread double top. Resistance, based on a vertical count, is now at $262.82, further supporting the consideration for purchases on pullbacks. Beyond this level, resistance is at $278.99, again from vertical counts of prior advances and its periodic consolidation. With its Bullish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, IFC.TO is exhibiting short-term strength against all the asset classes.