Citigroup needs to get through $5

Apr 23rd, 2010 – Comment

Back on February 26 th it was noted that a good entry point would be in the $3.85 range and at yesterday’s close it has provided a 26.49% return. Yes you have to manage the foreign exchange risk but still sweet!


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citigroup

 

Do you think Citigroup is a good buy right now?

Bolaji

 

Hi Bolaji,

Citigroup Inc. (C NYSE) has weathered quite the storm as have all the boats in the financial fleet but the advance from the lows is now meeting some resistance as reported on February 26 when I last covered the company.

c1

 C is a vessel that has been tossed and battered by the financial tsunami that hit the markets in late 2008. It traded for $50 a share in 2007 and has had to endure quite the slide down to the March 2009 lows. At yesterday’s close its trading at less than one tenth of its previous high value. Gotta hurt!

No doubt the shares have done well advancing nearly 500% from the lows but the resistance at $5.00  hasn’t been taken out even on better than expected Q1 results reported on April 19, 2010.

 

c3

The six month chart provides a close up of the most recent trading action in the stock. It made a nice advance since March and still stalled at $5.00. The reason that $5 is so important is that most institutional investors won’t buy shares in a company that are trading below that price.

If C can get and stay above $5 it would start to appear on the buy lists of many money managers.

Back on February 26 th it was noted that a good entry point would be in the $3.85 range and at yesterday’s close it has provided a 26.49% return.  Yes you have to manage the foreign exchange risk but still sweet!

Also mentioned at the time was that financials enjoy a period of seasonal strength from January to April and with that in mind we would want to look for an entry point above $5.00 to take out some of the risk associated with resistance at this level. Put it on your watch list. If it gets through $5 it could have a nice run with little resistance to $6.00 but you may have to go through $4.00 to get there.

Happy Capitalism.

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