Some people want to blame Lehman. Some want to blame Citi (C). Some want to blame the Federal Reserve. Me, I think American International Group (AIG) was the Enron of 2008. It ran some businesses extremely well, but from what my chartist mind can understand about credit default swaps, I think AIG was the company that took America to the brink. The stock of AIG has had a big comeback from those dark days in late 2008, but what about now?
In this chart of AIG, above, I can see three strong attempts to break above the $64 to $65 area. Each of these three attempts failed. Chartists call this a "triple top formation." While AIG still has an upward sloping 200-day moving average, notice the volume spikes on the rallies. Volume expands, but AIG must have closed lower because the On-Balance-Volume (OBV) line peaked in July. A declining OBV line for so many months is telling me that AIG has been under liquidation with shares moving from strong hands. Selling is likely to increase on a break down below $58, and more on a break down below $55.
This weekly chart, above, also has me worried as a technician. AIG more than tripled, but on this timeframe the chart of AIG looks like a double top. AIG is breaking below the 40-week moving average. The OBV line is stalled and our momentum study is fading, foreshadowing weaker prices ahead. On this chart, the key point is the support around the $50 level.