A Look at AIG

I always found AIG to be an interesting stock ever since it fell from over $1500.00 a share to under $10.00 a share in 2008. I took a look at it recently and it was showing interesting technical properties that I would like to share.

AIG:

Head & Shoulders: Near the end of Spring AIG topped out about a month after S&P 500. The topping point in May also seems to be the "head" of a head & shoulders pattern it was making. Shortly after there was a big sell off on high volume, and a small right shoulder was barely formed.

Inverse Head & Shoulders: From its peak in May, AIG eventually fell over 28% bottoming in June. By mid  June it was clear that an inverse Head and shoulders was forming. The breakout from this bottoming process was suspect since it was done on low volume, and there was a false break out a couple of days later.

Sideways Range: Straight out of the inverse head & shoulders AIG went right into a sideways range. At this point I was thinking of putting a trade on the stock if it showed confirmation out of the range. What stopped me though was on August 6th AIG showed unusual high volume, more than double its volume moving average 50, and did not break out of its range. Consolidation patterns characteristically show gradually decreasing volume.

Post Range: When it broke out of this range, it was again done on insignificant volume. The gap down from May also seemed to slow it down. Whether the breakout from the sideways range turns into a sustained rally is yet to be seen. The recent pullout does not bother me though since it is not uncommon for stocks to pullback to the top of its consolidation range shortly after it breaks out.

Final thoughts: This stock seems difficult to trade since it is subject to poorly formed patterns and false breakouts. I  personally plan on to keep watching it since the financial sector in general seems to be rallying. Moreover, AIG is showing good relative strength within its sector.