Watching AIG Again

Thursday, November 19, 2009

At the end of September I began looking at AIG for a large short squeeze trade into the $70s. Since then, I was stopped out of my small initial position as the stock dribbled off into the 30s and fell out play.

Today, the stock hit my radar once again when I noticed that short interest jumped 25% up to 20.58% of the total float. The stock has moved from the "easy to borrow" list to the "hard to borrow" list. The move onto this list indicates that brokerages are finding it difficult to locate shares for short sellers looking to borrow and sell shares.

This implies a comfort among shorts in their positions as the stock's range tightens considerably. I will not be entering this trade yet but I suspect a false breakdown could lead to a massive short squeeze trade that can offer incredible risk-to-reward for an active trader.


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