$AIG~ A look towards a longer time frame.

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.

AIG Day Bar Chart

But we must shift to the week chart seen below to get the big picture.

AIG : Week bar chart

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.

Nick Pirraglia

TradersThinkTank

About Nickolas Pirraglia

Nick Pirraglia started his career in trading in 1991 after returning to the US as an Army Officer deployed in Iraq. He began as a bond broker and worked his way into trading. Expert mentoring, hard work and a disciplined approach to the markets has allowed Nick the ability to maintain a very successful career in Capital Markets and Trading for over 20 years as a professional OTC Market Maker and independent trader. Nick has also managed the trading desks for a two Dallas based capital management companies and traded equities for a Dallas based hedge fund. Nick has trained and mentored thousands of customers in the rigors of trading, technical analysis and risk controls. Recently, Nick had broadened his market experience through the design and product management of two automated trading platforms. He has the pleasure of working with some of the brightest minds in the trading community and has collaborated with experts in data, design, engineering and trading psychology. An avid long distance runner, Nick completed several marathon events, qualified for the Boston marathon, completed several long distance Triathlons to include finishing a full Ironman triathlon.
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