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5 Big Trades From the Financial Sector

Stocks in this article: WFC AHL FII AIG AXP

American International Group

First up is insurance giant American International Group (AIG). As impressive as the price performance of the financial sector has been in 2012, AIG shareholders have managed to outperform even that. Shares of this $62 billion company have rallied more than 56% since the first trading day of January, and now AIG's chart is indicating even higher ground for the final quarter of 2012.

>>5 Leanest and Meanest Bank Stocks

That's because AIG is currently forming an ascending triangle pattern, a setup that's formed by a horizontal resistance level to the upside, and uptrending support below shares. Essentially, as AIG's price bounced in between those two technically important levels, it was getting squeezed closer and closer to a breakout above $35 resistance. That breakout finally happened last week.

Since then, shares have been consolidating, giving buyers a chance to catch their breath after pushing AIG's price through a level that's previously acted like a ceiling for shares. Momentum, measured by 14-day RSI, has been trending higher as over the last several months, a factor that adds some extra significance to the breakout in AIG. Since momentum is a leading indicator of price, the momentum uptrend means that AIG's price is still increasing at an increasing rate right now.

If you decide to buy here, I'd recommend keeping a tight stop just under the 50-day moving average.

I also featured AIG last month in " 5 Huge Stocks Ready to Slingshot Higher."

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