With Hurricane Harvey making waves -- literally -- insurance companies like Travelers Companies (TRV) - Get Travelers Companies, Inc. Report , American International Group (AIG) - Get American International Group, Inc. Report , and Warren Buffett's Berkshire Hathaway (BRK.A) - Get BRK.A Report (BRK.B) - Get Berkshire Hathaway Inc. Class B Report , are all in focus.

Zeroing in on AIG stock, shares are trading near its August lows Tuesday as it continues to trace out an ugly downside reversal. Despite a solid breakout and a very strong earnings-inspired gap higher on August 3, the stock has been steadily retreating since. Less than two weeks later AIG fell below its July lows and is still unable to attract buyers as the drop extends into this week. The result is an ominous downside monthly reversal which will likely drive the stock lower in the coming weeks.

  • AIG Seeks Buyer for $2 Billion Life Settlements Portfolio
  • One Hurricane Harvey Damage Estimate: $30 Billion

Some stabilization is taking place near the $60 level, but this will likely not last. With AIG now below the May lows, patient investors should expect a deeper pullback. A retest of the 2017 lows, set back in April, is a logical downside target. AIG will become a very low-risk buy in this area, especially if the oversold levels reached during the Brexit flush are matched.

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As the current downtrend persists in AIG stock, investors should keep a close eye on then $57.50 to $59 area. This major support zone includes the April 2017 lows near the upper band and the September/November lows of last year near the lower band. If AIG can regain its footing here, a very low-risk buying opportunity will develop. Until then, the stock may prove a frustrating long.

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At the time of publication, the author held no position in AIG.