AIG has been a dog over the past 18 months, but every once in a while it has a spark of momentum brilliance. I usually attribute outsized demand in AIG as a result of a spike in risk appetite as well as any government voodoo that is taking place in equity land.
But what does this hold for equities? The chart below is a 2 year daily chart of AIG with a bottom volatility study. The study isn't important; just eyeball the big green spikes up (vol up with stock):
Next we're going to take those date clusters and see what the SPY did around that time:
So it seems that when we get large upside volatility spikes in AIG, it tends to be followed with a ton of risk and liquidity into the equity markets. The sample size is statistically insignificant, but for now this risk measure bodes well for the equity market.