Up until the end of last week, the American International Group Inc stock (NYSE: AIG) was trading inside a rising channel formation, which had been in play since the end of December. But the lower bound of it got broken and the share price ended Friday’s trading session around the 52-dollar mark. This could be seen a sign of worry for some traders, as it may have increased AIG’s chances of moving lower in the near term. In addition to the bad news, technically, the stock also formed something like a double top, where the so-called “neckline” sits at the same 52.00 level. We will wait for a clear drop and a daily close below that level, before examining a further move down. This is why for now we will stay somewhat bearish.
As mentioned above, a further slide below the 52.00 hurdle could spook some new investors, or even force a few existing ones to liquidate some of their current positions. This is when we will examine a possible test of the 50.65 obstacle, which also coincides with the 200-day EMA. A break of it may lead AIG to the 49.40 zone, which on May 9th was seen acting as a strong support. It may do the same trick and the share price could rebound back up from there again. But if there is still not enough enthusiasm among more buyers to jump back into the stock, it might reverse south again and fall below the previously discussed 49.40 area. Such a move might open the door to the 47.80 hurdle, marked by the high of May 1st.
We can see that our oscillators, the RSI and the MACD, both started declining. The RSI is now below 50 and continues to point lower. The MACD, from the end of May to the end of July, showed us negative divergence, which followed by a slide in the price. So far, both indicators support the idea of a possible move lower, which may drag for a while more.
Alternatively, if the price suddenly reverses and moves back inside the rising channel and climbs above the 53.20 barrier, marked by the high of August 29th, this could attract more buyers and we may see the price accelerating to the 55.20 area. That area acted as good resistance on August 19th. Initially we could see AIG stalling around there, or even correcting back down a bit. But if the price remains above the lower bound of the rising channel, we will stay positive over the short-term outlook. The stock could then get lifted above the 55.20 obstacle and target the 57.20 zone, marked near the highs of July 25th and August 8th.
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
There are risks involved with trading of cash equities. Past performance is not indicative of future results. You should consider whether you can tolerate such losses before trading. Please read the full Risk Disclosure.
Copyright 2019 JFD Group Ltd.