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 22, 2001

Yesterday’s bloodletting in the Dow sent AGC shares to our stop level of $74.50. The sell-off, which was accompanied by heavy selling (1,263,400 shares), leads us to believe that the stock might encounter more short-term selling. So, given the magnitude of this decline and the potential for more weakness, we feel that our stop was well positioned.

Picked on February 12th @ $78.68
Profit/Loss = -4.19 (-5%) (Stopped Wednesday @ $74.50)
Best Profit = +0.72 (+1%)

February 20, 2001

New legislation that now allows for banks, insurers, and security companies to be combined as one business (H.R. 10), should help established life insurance companies, like AGC to attract existing customers to their financial services. Analysts are expecting for this new legislation to add a 15% growth in earnings to the multi-line provider group. However, despite these sturdy fundamentals, AGC experienced some turbulence on the day. Lead mostly by sector related weakness, AGC shares fell lower 2.47% to a close of $76.94. The S&P Insurance Index lost 17 points or 2.24% on the day and kept steady selling pressure on our AGC play. Nevertheless, there was not any negative news tied to the sell off, so it could just be a shakeout. With that said, we’ll be looking for potential entries should the stock give us a strong bounce off the 10-dma of $76.71. Just below the $75 mark, bolstered by previous lows should provide a much stronger barrier. Additional entry points can also come on the upside if shares ascend through resistance at the 50-dma ($77.69) or $80 on good volume of 850,000 shares or better. We’ll keep stops at $74.50 to protect our backside. Also, consider using strength/weakness in the Dow Jones Industrial Average (INDU) for entry or exit confirmations.

Picked on February 12th @ $78.68
Change since picked –1.75
Stop Loss @ $74.50

February 18, 2001

In providing a wider range of market-leading products, AGC has expanded and improved its unrivaled distribution network. The success of this network has accounted for much of the company’s revenue growth over the past several years, which is currently projected at 12% annually for the next five years. Rallying higher on Friday, AGC resumed its upward momentum and climbed 1.39 points, up 1.79%. Much of the gains were the result of a strong gap up at the open, which was followed by good buying throughout the day. The S&P Insurance Index (IUX.X) confirmed the industry’s strength, as it advanced by 3.81% on the day. With AGC residing just below its intermediate high of $79.40, we’ll expect initial resistance to come in at this level and then just higher at the $80 mark. Advances above each of these points will present entry opportunities, when accompanied by good daily volume of 850,000 shares or better. Should this scenario unfold, we’ll anticipate additional challenges at the $85 and $90 levels. Today’s low of $77.55 will now present our first intraday support level, bolstered by the 50-dma of $77.75. However, a stronger base is sure to come at $75, strengthened by previous lows. We’ll keep our stops to $74.50, to guard against a reversal. Also, consider looking for signs of strength or weakness in the IUX.X before placing your trades.

Picked on February 12th @ $78.68
Change since picked +0.21
Stop Loss @ $74.50