Pru's 10% fall sounds alarm

FTSE 100 weakness yesterday forced a technical break of the one-year up-trend for insurer Prudential. But has this exposed shares to further risks to the downside? Technical analysis has the answers.

Prudential's rise from 285p 12-months ago, to over 530p only 2 weeks ago, was underpinned by a strong technical upward moving trendline. Fundamental news came and went, but to the delight of investors, nothing stopped the stock from marching relentlessly higher.

The icing on the cake was speculation regarding the sale of its internet banking arm Egg.

But as is so often the case just when everything looks at it's best something triggers a crack in values. And in this case it has exposed something that could be more akin to subsidence!

Yesterday's slip from 494p to 479p confirmed the break of the bull trendline, and as with any break of a long-term trend, it usually precipitates a knee-jerk reaction - in this case lower.

It has also forced investors to forget about Egg sale rumours and focus a little harder on the recent full year results. These were less than spectacular, leading ABN Amro to reiterate its 'reduce' advice.

So what can we expect for the coming days and weeks?

As with any formation break, expect a possible retracement to the 494p area, offering a good selling opportunity.

If the down move continues, expect initial support to steady values at 440p, while continued selling pressure could lead to a slump towards 410p. This area offers well-proven support and buyers.

On a more optimistic note, a surge and close above the old up-trend at 500p, would reinstate its validity and the continued upward momentum. Maybe a good Egg will save the day.