American International Group (AIG) has been a strong performer for most of the year and it is likely to continue still higher after a shallow pullback. A review of the charts and indicators should help keep things in perspective as year-end cross currents could send the wrong signals.
In this daily chart of AIG, above, we can see that prices are above the rising 50-day and 200-day moving averages. Prices are not that extended above the 50-day average but they could be considered too far above the 200-day average. The On-Balance-Volume (OBV) line has been moving sideways for much of 2016 but has been moving upward with prices since late September. More recently as prices made higher highs in November and December the 12-day momentum study made lower highs signaling a slowing of the acceleration of prices. Chartists call this different movement (higher prices vs. lower momentum) a bearish divergence and it can sometimes foreshadow weaker prices ahead.
In this weekly chart of AIG, above, we can see that prices are above the rising 40-week moving average line, maybe too far above. The weekly OBV line has been moving higher the past three years and supports and confirms the new highs. The Moving Average Convergence Divergence (MACD) oscillator has been bullish since August and is still pointed higher.
In this Point and Figure chart of AIG, above, we can see the price action without volume and without small jiggles or noise. $87 is the potential longer-term upside price target now that resistance at $62 has been cleared.
