AIG -- news releases vs. stock prices
It seems strange that how two news releases on two consecutive days affected the stock prices:
1. 7/9/09 -- AIG May Have Zero Value After Rescue
2. 7/10/09 -- AIG to pay executive more bonuses (sounds like its earnings increase)
At least the timing of the first release is strange. Does this look like a manipulation? With a big drop on 7/9/09, then a big increase on 7/10/09, somebody is making huge profit.
Any comments?
Answers
2082 points
alanj answered 4 months ago …
Looking at a chart the drop doesn't look that far out of line. It's been dropping since 6/29 not just on 7/09. On 7/08 it hardly moved at all. On 7/09 it dropped down to the bottom trend line. Starting at 7/02, draw a trend line using the low of the day. 7/09 lines up perfectly. If you start studying charts you will see that most of the time stocks trade technically. Huge unexpected news can also effect price movements. "AIG May Have Zero Value After Rescue", that's not unexpected. No surprise there. Most people who trade stocks knows that executives receive bonuses as part of their pay. No surprise there either. Result- the news announcements had no effect on the price of the stock. Those two news items where already priced into the stock. And it started going up because it was way over sold. Look at the RSI, Slow Stochastics, Williams%R, MACD. These common indicators are extremely low on 7/09 the day before the move up. Plus, the daily swing price on those two dates are within normal range. There is no manipulation. It's hard to manipulated stock prices when the stock trades in the millions of shares per day. This was just a great buying opportunity.
As far as bonuses go. Most people think of bonuses as something extra that is unexpected. That is not what these are. Executive bonuses are not really bonuses the way most people think. They are a part of their normal pay that is under contract. This does not necessarily mean that earnings have increased.
102 points
monkeyboy answered 4 months ago …
your arguement sounds good but it is the usual I hear in the metals market with out nowing the open and short positions on stocks you can always justify moves any way you please. in the metals market you can see open and short positions you know its manipulation you can watch as the big banks increase there shorts the price drop, they tell us that the prices drop in summer because of less investment money going in around the time the banks increase there short positions its very convienient
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