Climateer Investing: "Citigroup Inc. Stock Poised For Breakout" (C)

Monday, July 12, 2010

"Citigroup Inc. Stock Poised For Breakout" (C)

UPDATE: "Citigroup: Breakout!: "Buy Bullish Citigroup Options Before Earnings, JPMorgan Says" (C)"
Original post:
I peg the breakout level a penny higher than the writer. Take and hold $4.08. In late pre-market action the stock is up a couple cents at $4.06. More after the jump.
From NewsFuzion:

Citigroup Inc. (NYSE:C) stock is poised for a breakout beyond the 4.07 price level. Currently price rests 0.03 points below this major resistance level. The previous two times Citigroup’s stock has risen above 4.03 price it has touched 4.07 before descending back into range. The difference this time is momentum and decisiveness.

Citigroup Inc. Stock Will Break 4.07 Or Fall Back Within Range
Naturally the alternative of breaking north is returning to the mediocrity of the channel shown in this chart. Allow a worst case scenario of falling within this range that has had a dominant stranglehold on Citigroup’s stock for 22 trading days now. Yet there are still reasons to stay optimistic on why there may be a northern break.

Bullish MACD Divergence Can Be Seen, out with the old - in with the new
Bullish divergence is in favor of a bullish break for Citigroup’s stock. The spring is extremely loaded under pressure, if fundamentals cannot dictate direction for Citi’s stock then technical analysis is slated to come running out of a phone booth like Clark Kent very soon. Traders often grasp for any reason to make a trade, this is why many traders lose money. If there isn’t sound fundamental reason, most will eventually stare at their charts long enough to find justification to place an order. Yet, sometimes a chart will be too irresistible to remain sitting on your hands because you and thousands of fellow traders are looking at the exact same thing.
Key Notes:

Approaching 4.07 for a third time, if “C” falls within range 4.07 may be hit just because it’s there for the touching

Citigroup has experienced bullish momentum ever since the U.S. Government momentarily halted trading of company shares

MACD divergence has switched from bearish to bullish

OBV is performing impressively

This could all be entirely irrelevant by the end of Monday trading as is always possible....MORE

Back in June we posted "Citigroup Trapped by Moving Averages As Option Speculators Pour Money In (C) with the stock at $3.95:

...The company reports earnings on July 16, which is also an options expiration.
Although the prior quarter's $4.4 Bil probably won't be repeated because the $0.15/share had a big chunk of trading gains, expect the company to use similar verbiage:
"Loan losses coming down with growth of top-line revenue speaks to the overall recovery,"...
They reported on April 19, the Monday after op-ex.

From What's Trading:

Citi (C) June 4 call is the most actively traded equity options contract today. 50K now traded. Shares are trading up one cent to $4 even and, at almost 1 million contracts, the Citi June 4 call has the second largest open interest of any June contract heading into the expiration (second only to the Citi June 5 call). Consequently, some closing action is likely driving a lot of the activity, and some premium sellers are collecting a few pennies in recent trade. Some might also be rolling to the Sep 4 calls, which traded 47.3K and are today’s second most actively traded equity options contract.
Clear out all those $5's, pop through the 50-day and $4.40 looks easy.
Catch a decent earnings number and 25% in a month is doable, although it will take some buying enthusiasm, in the face of Treasury overhang.

There is reason to believe that the Treasury has an SEC opinion to the effect they shouldn't sell in the window immediately preceeding earnings, in which case we'd have a mystery/history set-up.
At least that's what happened last quarter....