American International Group (AIG) is scheduled to announce its fourth-quarter earnings after the close of trading here on Wednesday. Let's check out the charts and indicators of the reinsurance giant to see what they may say about the prospects for its shares.
In this daily bar chart of AIG, below, I see a rounded top pattern back in March-April-May and another top in December-January-February. Prices are now trading below the cresting 50-day moving average line but above the flat 200-day line. The trading volume shows an increase in December and February and suggests increased selling on strength. The On-Balance-Volume (OBV) line declined from April to October and then a short rise to December followed by sideways movement. The moves of the OBV line do not suggest aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator is now below the zero line in sell territory.
In this weekly Japanese candlestick chart of AIG, below, I am seeing a large top formation. AIG made a two-year rally to the $65 level in early 2022. A decline of more than 10% unfolds (this is the minimum needed for a double top) before a second attempt at the $65 level in December/January. Notice the flat 40-week moving average line, telling us that the longer-term trend is now neutral. The weekly OBV line shows a massive bearish divergence -- prices made equal highs but the indicator made a lower high on the second attempt. The same can be said for the movement of the MACD oscillator.
In this daily Point and Figure chart of AIG, below, I can see a downside price target in the $57 area. Not too bearish, but the direction is lower.
In this weekly Point and Figure chart of AIG, below. a price target of $54 is shown.
Bottom line strategy: I have no knowledge of what AIG is going to report to shareholders this evening but the charts are positioned for further declines in the weeks and months ahead. Avoid the long side of AIG.
