July 1, 2009 July 1, 2009 By charlie In , , , , , ,

Twitter Ticker ($AIG)

AIG090701

American International Group was a screaming short according to StockTwits traders like @smbcapital. Shares of AIG fell 22% after a 1-20 reverse stock split, and the chart has formed a double bottom breakdown, a distinctly bearish signal.

Things look grim for the beleaguered insurer, despite the claims of CEO Ed Liddy who said AIG has significantly reduced risk and has an “excellent chance” of repaying the government.

Unless AIG can get above the 20sma around 35, there is no reason to invest here. This market needs time to heal, and though a short target of 7.4 may seem crazy now, who knows what September will bring.