Genworth Financial Inc (NYSE:GNW) – Buy Above $12.75 With Stop Loss Below $11.60

Denver, CO, 08/21/2013 (Avauncer.com) – Genworth Financial Inc (NYSE:GNW) (Closed: $12.13, Up: 0.92%) opened weak and made its low in the opening minutes itself but soon recovered and closed in the green. The volume at 8 million was just slightly higher than the average volume. The price action of the day formed a Bullish Hammer candlestick, which might be a precursor to a rally.

The stock had rallied from its 2003 bottom of $18.75 to make a top at $37 by 2007. It made a Rising Wedge or an Ending Diagonal, as called in the Elliot Wave parlance, at the top and the break of that pattern brought a vicious fall down. The most destructive bear market of the last few decades didn’t help the case and the stock spiralled down to $0.7 by the end of 2008. The subsequent recovery retraced the last part of the fall and took the price to $19.36 in 2010. The next correction took it to $4.06 levels once again by 2012 which happened to be the latest bottom. The stock created an Adam & Eve Double Bottom with the neckline at $9.68. It broke out that pattern in March 2013. The pattern gives us a target of $15.30, which is not achieved yet.

The price got resisted at $13.79 in July 2013, which is the 61.8% retracement level of the previous fall in 2010 – 2012. The next resistance levels would be the last swing high of $14.77 levels & the $16.10 – $16.30 levels above that. If we take the last fall as the B wave, then C has started from $4.06 for a target of $22.64. This would be confirmed by a move above $16.30.

The correction of the last 5 weeks has taken support exactly on the lower boundary of the huge channel that contains the entire rally from the 2012 bottom. Investors could buy above $12.75 with the Tuesday low of $11.62 as a stop loss.