That's more or less what's happening right now in insurance giant AIG ( AIG). We last looked at the rectangle pattern forming in shares AIG back in early June, when the broad market was still inside its trend channel. Clearly, that's no longer the case.
AIG broke down below $43 in yesterday's session, sparking a sell signal for shares. While the relatively tight range of AIG's triangle means that downside is likely to be pretty contained, there's still a while to go before AIG hits support around $39.Whenever you're looking at any technical price pattern, it's critical to think in terms of those buyers and sellers. Triangles, rectangles and other pattern names are a good quick way to explain what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares. That support level at $43 was a price where there had been an excess of demand of shares; in other words, it's a place where buyers were more eager to step in and buy shares at a lower price than sellers were to sell. That's what makes the breakdown below $43 so significant. The move indicates that sellers are finally strong enough to absorb all of the excess demand above that price level this week.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts