Blogger Guy’s latest post on C suggests a double bottom of $4 was put in on Friday.  I thought that there needed to be a wider number of trading days between lows before you could properly make that call.

“Citigroup Inc (C:NYSE) appears to have made a double bottom at $4 on Friday as old news of a potential 10 billion dollar write down failed to move the stock lower. An analyst even came on CNBC and said that if Citigroup was forced to make this write down, it would not effect the long term prospects and would basically be a non issue. $4.00 must hold here or else the stock faces another plunge into the $3.57-$3.80 range. I continue to watch the 10 & 50 day moving averages. We will see some strength in Citigroup when it closes back over the 10 day moving average ( currently $4.33 ) and should see the uptrend continue when Citi closes back over the 50 day moving average ( $4.58 ).”

I just wish that the bank CEOs would be more vocal in denouncing the FUD.  I thought that the whole point of the stress tests was to take account of worst case scenarios (including commercial property defaults). If it IS pure FUD for goodness sake say so and let’s move on.

gatesofhell - 01 November 2009 03:12 PM

Blogger Guy’s latest post on C suggests a double bottom of $4 was put in on Friday.  I thought that there needed to be a wider number of trading days between lows before you could properly make that call.

“Citigroup Inc (C:NYSE) appears to have made a double bottom at $4 on Friday as old news of a potential 10 billion dollar write down failed to move the stock lower. An analyst even came on CNBC and said that if Citigroup was forced to make this write down, it would not effect the long term prospects and would basically be a non issue. $4.00 must hold here or else the stock faces another plunge into the $3.57-$3.80 range. I continue to watch the 10 & 50 day moving averages. We will see some strength in Citigroup when it closes back over the 10 day moving average ( currently $4.33 ) and should see the uptrend continue when Citi closes back over the 50 day moving average ( $4.58 ).”

I just wish that the bank CEOs would be more vocal in denouncing the FUD.  I thought that the whole point of the stress tests was to take account of worst case scenarios (including commercial property defaults). If it IS pure FUD for goodness sake say so and let’s move on.

What hit C and may hit other banks on Friday was the deferred tax asset and a 10 billion write down possibly for the coming Q.  I don’t know if this is old news or not.  It came from a reputable analyst on Friday and C did respond saying they have no idea how he came up with that figure.  Anyone know if this is truly old news and conveniently being surfaced to hit the banks again?  They are trying to manage the bottom line by showing growth when in fact they should be depleting this tax credit from their balance sheet.  That’s how I understand things.  It’s not about the stress tests.

So much for that $4 double bottom…

Eric Landstrom - 26 October 2009 11:40 AM

I think everybody is waiting for $4.00ish on C.

Closed at $3.99.  Are you sticking to your contrarian theory Eric?

I have a buy order in at the 200 day - 3.49 range if memory serves me.

runedge - 03 November 2009 10:57 AM

I have a buy order in at the 200 day - 3.49 range if memory serves me.

Yeah, 3.48 and on the way back up for the first time in a loooong time.

Ron Insana who went bearish on the markets a month or so ago was talking yesterday how he’s ready to start buying and did reference C as he may be a buyer in a few days.  I think that 200 MA will bring in a lot of buyers.  I’m waiting to buy 2011 $5 strikes there.

dc930 - 03 November 2009 10:48 AM

Eric Landstrom - 26 October 2009 11:40 AM

I think everybody is waiting for $4.00ish on C.

Closed at $3.99.  Are you sticking to your contrarian theory Eric?

I am but I want a good overshoot on the down side. 1020 on the S&P has been floated around as a market buy in point but I’m looking at minute charts waiting for the tell-tail signs of stop losses to kick in. That said, I feel like $3.85 is good but technicals aren’t jiving with my gut.

Eric Landstrom - 03 November 2009 12:22 PM

... but I’m looking at minute charts waiting for the tell-tail signs of stop losses to kick in.

What would stops kicking in look like? Increased volume? By how much?

Eric Landstrom - 03 November 2009 12:22 PM

...That said, I feel like $3.85 is good but technicals aren’t jiving with my gut.

Intraday, your $3.85 target looks as good as your $4.06 last week, as far as picking short term support.  Did you derive those targets from TA?

dc930 - 03 November 2009 01:54 PM

Eric Landstrom - 03 November 2009 12:22 PM

...That said, I feel like $3.85 is good but technicals aren’t jiving with my gut.

Intraday, your $3.85 target looks as good as your $4.06 last week, as far as picking short term support.  Did you derive those targets from TA?

Today’s S1 is 3.83.  Without a major collapse of the markets, there’s no expectation of C dropping much below that, at least not for long. 3.97 (where it sits now) is the pivot point.

CaptainBoom - 03 November 2009 01:00 PM

Eric Landstrom - 03 November 2009 12:22 PM

... but I’m looking at minute charts waiting for the tell-tail signs of stop losses to kick in.

What would stops kicking in look like? Increased volume? By how much?

I should stop out-thinking myself and stick with what I’m good at: trading. Missed a 3.5% return in one trade by thinking too much.

At any-rate, what a person needs to do is figure out what you want to do and them multiply that by one million and you’ve a market segment. If you don’t know what to do, then it is likely that the market doesn’t know what to do either. If so, then search for a tool that seems to be predicting the market. If none can be found, default to sentiment and if sentiment is the market feels oversold, then the market is very likely to be oversold (there is an art to this). All of this is what my gut told me and I rather unfashionably did nothing. The big idea that I failed to remember is that it isn’t about what technique or system used to invest or trade, its about the traders ability to execute!

Stops? As it looks to me, without news trumping the market and while we have the Fed meeting taking place, I think C rattles around under $4.00. If I had purchased at $3.85 as I had considered but then failed to execute, I would have set a 1% stop, rounded down to $3.81, a four cent spread on 10 or 20 thousand shares for a trade.

I expect tomorrows FED-speak to not include language of raising interest rates but to include a statement that the Fed will raise rates when it believes the market can withstand a rate hike. In other words, I expect the Fed will not try to defend a falling dollar because it knows what happened in ‘37 and to Japan in the nineties when it raised its prime rate.

A week out I’m keen to know what the earnings of the FRE will be. .gov has been using the GSEs to backstop state bonds and I wonder if this will effect the bottom line. What I expect is the the GSEs will continue to reflect a high rate of defaults.

(Stolen from the Intraday thread)

runedge - 03 November 2009 04:02 PM

Eric Landstrom - 03 November 2009 03:57 PM

The financials are running up before Fed-speak. Chartguy and I bought financial calls.

Also don’t forget the home buyer tax credit is poised to be voted on Friday to now run through April 2010.  That will help the banks for sure as well…  Been moving into BAC common out of BAC preferred.  Looks like C may have put in it’s bottom.

What makes today different than the other recent days it bounced off of support?  That rally at the end of the day?  The fact that it closed higher than it opened?

More people where moving into C than moving out.

the biggest bank in the country has been quietly selling some of the option-ARM loans it bought when it acquired Countrywide Financial last year. American Banker reports some of the loans Bank of America has been dumping sell for as little as 40 cents on the dollar. The banking trade magazine says delinquency rates are 30%-40%.

At the moment, the resetting of subprime mortgages has abated, and the resetting of option-ARM loans hasn’t yet kicked into high gear. At the Value Investing Congress a couple weeks ago in New York, co-host/investor Whitney Tilson put up the slide below, which tells you why mortgage resets aren’t filling the headlines quite like they used to and why you can expect them to take the stage front and center over the next couple years…

The purple mountain on the left is the subprime crisis, which is behind us in 2007 and 2008. The mostly blue mountain on the right is the option-ARM crisis, a two- to three-year slog that lies just around the next bend and could continue through 2012.

Right now, we’re sitting in the eye of this mortgage hurricane. When we hit the opposite wall early next year, the storm will become deadly all over again.