4 Trade Ideas for AIG: Bonus Idea

• Posted by Greg Harmon
• on February 10th, 2020

Here is your Bonus Idea with links to the full Top Ten:

AIG, $AIG, started higher in December 2018 and continued to a peak in July 2019. It paused and retrenched before making a final top in September. Since then it has pulled back in a channel, retracing 38.2% of the move higher in December 2019. It found support there and has consolidated over that level and under the 200 day SMA. At the end of last week it broke above the falling channel and closed above the 200 day SMA for the first time since November.

The RSI is rising back into the bullish zone as the Bollinger Bands® point higher. The MACD has crossed up and is now positive. There is resistance at 54 and 55 then 56.15 and 57.75 before 58.80 and 60 then 61.50 followed by 62.50 and 65. Support lower comes at 57.25 and 51.50 then 50 and a gap to fill to 47.50. Short interest is low at 1.9%. The stock pays a dividend with an annual yield of 2.39% and started trading ex-dividend on December 11th. The company is expected to report earnings next on Thursday after the close.

The weekly options chain implies a $2.50 move this week. It also shows the biggest open interest at the 53 strike on the call side. The February options chain shows the biggest open interest at the 50 strike on the put side and then similar open interest at the 52.50 call, but the largest at the 55 call. In the March chain the largest open interest is below at 45 and 50 on the put side and at the 52.50 call.

AIG, Ticker: $AIG

Trade Idea 1: Buy the stock on a move over 54 with a stop at 52.

Trade Idea 2: Buy the stock on a move over 54 and add a February 52/50 Put Spread (50 cents) while selling the March 57.50 Call (45 cents).

Trade Idea 3: Buy the February 54/55 Call Spread (45 cents) and sell the February 50 Put (35 cents).

Trade Idea 4: Buy the February/March 55 Call Calendar (40 cents) and sell the February 50 Put (35 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which saw the first week of February end with some profit taking after a strong week for equities.

Elsewhere look for Gold to possibly pause in the uptrend while Crude Oil may pause in the downtrend. The US Dollar Index looks strong and ready for more upside while US Treasuries start a new uptrend. The Shanghai Composite looks to continue the short term move higher while Emerging Markets look like a volatile directionless mess.

The Volatility Index looks to remain at low levels making the path easier for equity markets to the upside. Their charts also look strong on the longer timeframe, especially the QQQ. But on the shorter timeframe both the SPY and IWM are showing some signs of weakness. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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