Weekly Options Trading: AIG Trade Analysis (9-20-11)
American International Group, Inc. is an international insurance organization. The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. It also involves in commercial aircraft leasing and residential mortgage guaranty insurance businesses. The company, through Chartis Inc., provides various property and casualty insurance products under commercial and consumer categories
worldwide. These products include surplus lines, executive liability/directors and officers liability, employment practices, excess casualty, and travel/assistance lines.
Trade Recommendations— because the bearish flag AIG appears to be in, a weekly option trade should be cautious. We are moving down in this formation but extreme caution should be taken. Since this formation is well formed, we need to be careful that the stock doesn’t continue down on a break through. But it could bounce off of support. So a weekly option strategy should wait until we have more discovery of our direction.
Bollinger Bands— AIG has been healthy as it has bounced in a slight bullish direction from the bottom to the top of the Bollinger Bands. It continues to move up. Presently it is moving back down, let’s see if it will touch resistance and move back up or will it define the continued longer term move down.
RSI— AIG has followed the chart in the RSI here. We are not seeing anything that tells us differently but supports the bullish move up.
MACD— we learn a little more about the AIG from the MACD indicator. First of all, we can tell there is not a whole lot of strength in this intended move. For the bullish move, we have still been in the bearish territory. But the MACD Histogram has given us bullish territory. Since it has been moving down, we are wondering if we are now going to break through the pattern and continue down.
Chart— After a prolonged downward move, we now have been inching our way upward and it appears that we have a bearish flag formation.
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