Trade Idea: Long AIG for Another Squeeze

Wednesday, September 30, 2009


AIG has been the story of this summer for active traders consolidating and breaking out 4 times since the beginning of July. Traders around the globe have used AIG as a vehicle for short-term trading for the last couple months. With 80% of the equity owned by the government and a 20% short interest on the shares, all of the borrowable shares are shorted. This dynamic provides explosive trades to the upside once they breakout.

The trade is to begin accumulating shares in this current consolidation. The breakout is over $55 and I think the stock could easily see the 70-dollar range. This style of trade has happened 4 times now and I think a 5th time is not out of the question and could be the largest squeeze yet.

I'm nibbling on today's weakness against short-term support at $43. This trade may need a couple weeks but if it works out, the risk-to-reward is, and has been, absolutely phenomenal.


Brandon Rowley said...

Well, this pulled in a bit farther than I anticipated and I was stopped on my small initial speculative position. Friday's reversal action is encouraging though and I think the trade is still likely to occur sometime over the next several weeks.

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