American General Corp. is a diversified financial services organization with assets of $115 billion at December 31, 1999. American General provides retirement services, life insurance, consumer loans, and investments to 12 million customers. The Company organizes its operations in three business divisions: retirement services, life insurance, and consumer finance.

February 12, 2001

American General Corporation (AGC) is a leading provider of retirement annuities, life insurance, and credit-related financial services. The recent fall of interest rates has renewed excitement in the financial services industry, which we feel could attract a wave of new buyers to leaders like AGC. What’s more, the company recently announced a 2:1 split, payable on March 1st. In our opinion, this certainly makes AGC a standout in its group and offers an attractive new split run play. As for the stock, AGC shares suggest that an increase in buying activity is taking place. Today’s run through $78 cleared two previous highs and closed sharply above the 50-dma of $77.75. Moreover, a positive MACD and good volume of 735,900 shares accompanied the advance, which may improve the possibility of a breakout scenario. So, should this set-up unfold, we’ll look for resistance points to follow at the $80 and $85 levels. Keep in mind that AGC’s all-time high resides at the $83.44 mark and could also pose a challenge for the stock. For entry points on the upside, we’ll look for shares to advance through resistance on volume of at least 400,000 shares by 1:00 EST. On the other hand, a pullback will likely hit an initial support base at the 50-dma. Just below, a strong base at $75 provided good support for the recent rally and should remain as a good barrier. We’ll set stops below support at $74.50 to protect are backside. We’ll plan our exit strategies ahead of the March 1st payable date, unless stopped out beforehand.

Picked on February 12th @ $78.68
Change since picked 0.00
Stop Loss @ $74.50

February 15, 2001

The strategic organization of three key business divisions (retirement, life insurance and consumer finance) has enabled AGC to quickly become one of the nations largest financial services organizations. Furthermore, the company is expected to generate solid EPS growth of 16% for the year. The majority of this growth is expected to come from AGC’s life insurance segment, which currently accounts for nearly 50% of the company’s operating earnings. As for our play, shares fell early in the trading session only to give a sharp intra-day bounce near recent lows at $76.15. Good buying in the last hour of trading today may help the stock to continue its rebound into tomorrow’s trading. Higher prices with strong upside volume at the open will be a positive indication of a follow through. With that in mind, we now need to consider the potential for initial resistance to come at the recent high of $79.40. We’ll expect further challenges to come at the $80 and $85 levels (near all-time highs). Strength in the S&P Insurance Index (IUX) could trigger the kind of momentum buying we need to reach new highs. Advances through resistance, when combined with good volume (850,000 shares or more) will present us with an opportunity to open additional positions. As for support, today’s low of $76.15 has been confirmed as our initial foothold. Further declines will likely face stiffer resistance at $75, bolstered by previous bottoms. This level will provide the final defense ahead of our stop at $74.50. The IUX should provide some confirmation for entries and exits.

Picked on February 12th @ $78.68
Change since picked –1.18
Stop Loss @ $74.50

February 13, 2001

With sector rotation moving money back into financial stocks, investors are hoping that the recent cutback in interest rates will trigger another rally in the sector. With this in mind, they may look to AGC, which is currently experiencing rapid growth in its annuity and retirement savings businesses. Despite the strong performance of AGC’s shares, the stock is still trading at a P/E ratio in line with that of the industry. As for our play, AGC shares gapped at the open and hit an intraday high of $79.40 before falling to lower levels late in the day. The good news is that relatively light volume of 592,100 shares accompanied the fall, which could suggest only a temporary pullback. However, should the stock continue to move lower, we’ll expect immediate support to come at the 5-dma at $77.21. Secondary support at the $76 mark could be strengthened by a convergence of the 10 and 20-dma’s of $76.61 and $76.37, respectively. On the upside, look for initial resistance to arise at the 50-dma of $77.81. We’ll look for potential buy points to occur when shares advance through resistance on volume of at least 500,000 shares traded by 1:00 EST. Remember to plan your exits ahead of the March 1st payable date.

Picked on February 12th @ $78.68
Change since picked –1.06
Stop Loss @ $74.50