Stock Trading Predictions & Technical Analysis: AIG

Saturday, April 24, 2010

AIG - Trending Up

AIG - HOLD

AIG has been trading in a major up trend above its 20 day MA since the beginning of March and its 50 day MA recently crossed above its 200 day MA which is a bullish sign. However, AIG is one of the most volatile stocks I know of and a pullback towards its 20 day MA (around $38.50) is imminent. Despite still trending in a major up trend, AIG's pullbacks are significant and if it were to begin on Monday could lose about 13% of its vale before bouncing back up. That's why in the case of AIG it's always safer to take a long position near a support level for which it recently bounced back up from. Keep in mind that AIG could continue strongly higher from here, however it's hard to predict when the pullback will start, but you can expect it to be brutal. Given the fact that volume has been trending down during the past trading sessions while the price moved up may be a hint that AIG will be pulling back soon. If you are already long AIG, you want to HOLD on to it as long as it continues moving higher. Based on the current price of $44 that would be immediately followed by a pullback, I would be aiming to get long around $38.50 to $40 depending on whether or not AIG continues higher in the upcoming trading sessions.

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TECHNICAL INDICATORS

BUY SIGNAL: Indicates the possibility of the start of a new up trend or the continuation of the current up trend. This signal may be often given in the early stages of a potential new up trend that was preceded by a down or sideways trend. Such signals do not always succeed and may fail at time.

BUY: Indicates that the current up trend is already in motion and a BUY SIGNAL was already given earlier. A BUY does not necessarily indicate that the stock will continue higher from here, but simply that the stock is trending up. The further into the trend you decide to take a long position, the more risk you have of seeing it reverse back down sooner rather than later.

STRONG BUY SIGNAL: Indicates a stronger, more significant and reliable signal than a BUY SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG BUY: Indicates that the current up trend is already in motion and that STRONG BUY SIGNAL was already given.

SELL SIGNAL: Indicates the possibility of the start of a new down trend or the continuation of the current down trend. This signal may be often given in the early stages of a potential new down trend that was preceded by an up or sideways trend. Such signals do not always succeed and may fail at time.

SELL: Indicates that the current down trend is already in motion and a SELL SIGNAL was already given earlier. A SELL does not necessarily indicate that the stock will continue lower from here, but simply that the stock is trending down. The further into the trend you decide to sell a position, the more risk you have of seeing it reverse back up.

STRONG SELL SIGNAL: Indicates a stronger, more significant and reliable signal than a SELL SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG SELL: Indicates that the current down trend is already in motion and that STRONG SELL SIGNAL was already given.

HOLD: Indicates that traders who already hold this stock, should hold on as long as the trend persists. This signal is usually given during an up trend for which it would be considered too risky to take a long position at this point.

STRONG HOLD: Indicates that the current trend has been in motion for a while and rarely deviated away from the trend. Although the stock may continue higher, there may not be enough potential up side to trigger a BUY SIGNAL. This type of indicator usually means that the stock has very strong support levels which may have been tested but not broken.

WAIT: Usually given during a sideways trend for which we are waiting for a move that would trigger a BUY SIGNAL or SELL SIGNAL. This could also indicate uncertainty and the risk that would be taken if you were to take a long position at the current level. Taking a long position after giving a WAIT indicator is considered a gamble.