Boston, MA 09/19/2014 (wallstreetpr) – Citigroup Inc (NYSE:C) (Closed: 53.66, Up: 2.42%) started running from the very opening minute and didn’t stop rising till mid-hours and ended the day near the day high. The buzz came from the news of the company offering mortgages with a discounted rate to the distressed borrowers or borrowers with a sub-prime crisis history. It doesn’t matter to the market that this definitely smells just like the 2007-08 period, when the entire financial world was melting down for exactly things like this. The stock jumped. The volume jumped at 27.3 million against an average of 15.7 million. The candle formed was a nice strong candle, without any apparent weakness but still the upside looks limited for the stock and the reason lies elsewhere.
The stock had a fantastic time in the period of 1994-2006. It appreciated from $51 in 1994 to $590 in 2000, more than a tenfold rise. The crash in 2001-02 pulled it down to $245 but it managed to bounce smartly in the next bull market and reached $570 by the end of 2006. Then came the mother of all bear markets, which took it to $9.70 in 2009. Since then, despite a huge flush of liquidity, the stock has failed to sustain above that 1994-low level of $51 for long.
A single glance at the last 5 years suffices to show the strong supply zone around the band of $54-$55. 2011 looks to be the only year, when the price didn’t challenge this resistance area just above $50 and was not pushed down. In 2013, the challenges have been more frequent with the general market remaining in a huge bull market and the current rally is the just the latest one. Maybe the price will test the $54-$55 levels this time too, but the indicators like the RSI or MACD show a much overextended state with some negative divergences.
Investors may exercise a bit of caution until the stock firmly closes above $55 on a weekly basis.
