The American insurance giant trading below a new yearly high
It has already been more than a couple of years, since President Barack Obama and the House Republicans have been engaged in and almost daily face-offs over fiscal policy.
AIG has been performing quite solidly lately
This relentless verbal jawboning appears to have slowed down for a few months, but will most certainly resume this summer as Congress and the White House have to engage in yet another fight over the debt ceiling limit increase.
Until this issue starts worrying the markets our team believes it is safe to check out some trading opportunities in AIG as the company has been performing quite solidly lately. It is reporting earnings on the 2nd of May so until this event risk we believe disorderly selloff in the company’s shares is unlikely, provided that the global macroeconomic picture remains relatively calm.
It was reported last week that a lawsuit filed by the shareholders of the company has finally been resolved with a settlement of $115 million. Former CEO Hank Greenberg and other defendants were accused of improper accounting dating back to 1999, culminating in September 2008, when the Government intervened to bailout the company.
With all claims finally resolved for AIG the share prices rallied steadily hitting the highest level since January 2011 toppling around the 40.65 area.
Economic data out of the US reported earlier on Tuesday did not provide much impetus to the market as CPI was reported a touch lower than expected which was counterbalanced by some housing data.
The US March housing starts were reported jumping up by 7% to 1.036 million units which was more than expected, but traders always have to be mindful about spring building as the weather improves and many projects get started around this time.
So even as the data is seasonally adjusted that does not portray a solid picture on the housing market. Nevertheless US stocks opened higher than yesterday’s close as worries from the Boston Marathon bombing subsided and investors appeared less jittery at least for now.
The opening rally in AIG shares was capped around the 39.50-60 area where the already broken to the upside resistance trend line is located. As the stock closed below that marker yesterday it is essential for the call players to push up for a daily close above 39.50, otherwise we could be looking for a dip back down to yesterdays low at 38.40, targeting major support line currently located in the 37.20-30 area.
If the stock market manages to ignore fears of further terrorist plots we do believe that this scenario for now is rather unlikely and we are on the way to retest recent highs marked on the 11th of April at 40.65.