AIG has had its share of media the past few years. But the stock has had help from the overall financials ($XLF) strong performance. The top sector gains for 2012 has helped the stock rebound from roughly 23 bucks to present levels near 38 bucks for the past 52 weeks of trading. Most recently, the move off the November range lows from the mid-30’s to break out past the old October highs in the mid-37 range has potentially re-defined a new range high. The daily chart below shows some simple price levels that are being worked off now. Obviously 38 is the spot, and bulls like myself want to see a gap up through 38 and a re-test to hold . But for now, 38 is the ceiling that AIG keeps bumping its head off of. (See my “Decision Making” tab for the TradersThinkTank system model).
The chart looks extended here on this time frame as the RSI, OBV and Stoch. hold a steady level. shorter term 10 period MA’s are pulling away from the 20 period which is a sign of momentum plus the stock offers a low volatility play in an otherwise nervous market.
But we must shift to the week chart seen below to get the big picture.
The week chart has room to run and this is most important for risk measures as the target(s) you have set must be in sight on your trading time frame or at least one time frame up. In this case, the AIG day chart seems like a crazy long above 37 but the weekly time frame offers a much different perspective. My trading model is long this with a longer term hold and my position size is set to agree with the day ranges to allow me to hold this with the trade to “hopefully” develop to bust out of 38 towards 40 then 42 levels. But we always trade with stops in mind or physically set. The good thing about this set-up is, even if I’m wrong, the stock will probably allow another entry as old longs and stock is worked off from the 35 to 37 ranges which are being offered out at 38.