Shares of AIG (AIG) - Get Report have rebounded strongly over the last two days. After closing at new 2016 lows on Monday, the stock has surged over 5.25% during the last two sessions. Wednesday's powerful advance drove shares past heavy resistance near the first-quarter lows. This impressive show of strength could mean a significant low has been reached this week.
AIG's steady march higher ended in late May after the stock had gained over 16% from the February low. In early June, as a healthy pullback took hold, the stock held key support near the February and April highs but was unable to regain its footing. By June 9 the stock had broken the lower band of its 13-week bull channel and was headed for a deep selloff. After eight weak sessions in a row, AIG bottomed at its April low, rebounded a bit and appeared to be on solid footing -- that is, until Brexit hit.
On Friday of last week and this Monday, AIG dropped a combined 11% as financial stocks took the brunt of the Brexit panic selling wave. At Monday's low the stock reached a major support level, the 2015 low of $48.68. This is also the area of the huge spike low set back in October of 2014. On Tuesday, AIG rallied nicely after opening the session just above this major support zone.
After yesterday's advance, AIG has left behind multiple layers of support. The stock is also tracing out a divergent low in both its daily and weekly moving average convergence/divergence indicators. In the near term, investors should consider the stock a buy on a pullback to these levels. Initial support runs from $50.50 to $49.80. This narrow range includes the February/March lows and yesterday's opening gap. If the stock can continue to build a foundation in this area, an important bottom will be in place.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.