Citigroup Shares Year-End Rally Could Be Under Way

Citigroup Inc. stock has lost ground since posting an all-time high at $76.14 on Oct. 12, even though the broad-based SPDR S&P Bank ETF hit an eight-month high more than two weeks later. This bearish divergence has attracted the unwelcome attention of sector bears, but the stock may have turned the corner this week and could now engage in a substantial year-end rally that could post new highs.

The stock ripped higher on Wednesday following an intraday breakdown through range support at $71, signaling a short-term selling climax ahead of bullish seasonality that continues through December triple-witching options expiation. The Federal Reserve is likely to raise interest rates for the first time since June that week as fund managers tidy up their 2017 portfolios, locking in profits through options protection.

Pullbacks in Citigroup stock will now hold $70 if this bullish scenario unfolds as expected, suggesting that long-side entries taken at or near that level will generate quick profits. More conservative players can wait until a breakout above the 60-minute 50-bar exponential moving average (EMA), currently above $72, because the level has acted as resistance four times since Nov. 3. In both schemes, it makes sense to take aggressive profits because early 2018 tax selling could trigger a more substantial decline. (See also: Why JPMorgan, Bank of America, Citigroup Can Rise 10%.)


Citigroup stock bounced at support this week, suggesting a potential end-of-year rally that could reach new highs. …read more

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Category: C, KBE

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