AIG, $AIG, broke down out of a descending triangle in February. That gave a target to the downside to 49.75. It reached the target with a gap down at the beginning of May. Since then it rose up to close the gap and fell back to a higher low. Then another move stopped at the same resistance last week. The Bollinger Bands® are shifted to the upside with the RSI on the edge of a move into the bullish zone. The MACD is rising and positive.
There is resistance at 55.50 and 56.65 then 58 and 60.40 before 62.65 and 64.80. Support lower comes at 54.40 and 53.20 then 52.20. Short interest is low at 2%. The company is expected to report earnings next on July 31st. The stock began trading ex-dividend June 13th.
The June 22 Expiry options chain shows big open interest at the 55 and 55.50 Call Strikes. Moving out to the July monthly chain shows biggest open interest at the 55 and 57.50 Call Strikes, but biggest at the 52.50 Put strike. The August chain, the first to cover the earnings report, shows biggest open interest at the 55 Strike, with over 10,000 contracts on the Call side and 5,000 on the Put side. There is large size at the 57.50 Call Strike also. November options show a massive open interest at the 60 Call Strike.
Trade Idea 1: Buy the stock on a move over 55.50 with a stop at 54.
Trade Idea 2: Buy the stock on a move over 55.50 and add a August 55/52.50 Put Spread (88 cents), selling a November 60 Call (98 cents) to pay for the protection.
Trade Idea 3: Buy the August 55/July 27 Expiry 57 Call Diagonal ($1.51).
Trade Idea 4: Buy the August 52.50/57.50 bull Risk Reversal (15 cents).
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 with June options expiration and the June FOMC meeting behind allowing the market to look forward to slow summer trading and the next quarter’s earnings season. As it does, equity markets continue to look strong.
Elsewhere look for Gold to resume its move lower while Crude Oil turns lower as well. The US Dollar Index continues to strengthen while US Treasuries consolidate in the channel that has held then all year. The Shanghai Composite is making multi year lows and looking weak with Emerging Markets on the verge of turning a digestive bull flag into a bearish reversal.
Volatility looks to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are a bit mixed with the IWM and then the QQQ leading in the shorter timeframe as the SPY continues to struggle at the March highs. But on the longer timeframe all look strong, still the IWM leading with the QQQ close behind and the SPY dragging up the rear. Use this information as you prepare for the coming week and trad’em well.
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.