Bank Run Part 2: Citigroup (C)

I am clearly overdoing it, I know. But since my BAC call options have been a success for me (up 300% since Christmas Eve), I thought, "Whatever..." Ben's stock market put is solidly in place.

So I bought C, February 5 calls, 2 days ago. It sat there yesterday, and it moved up a bit today, on the wake of JPM's stellar 4th quarter results. One junk after another, you might say. If you think about them on fundamentals, there's no way in hell that you would want to touch them (other than Ben's put on the market). I am just looking at their charts, and BAC had seemed a good buy back then, and C looked good enough to buy 2 days ago, as it was breaking out of a short consolidation. (Some technicals are signaling a slight negative divergence - MACD histogram, CCI, RSI somewhat - but do you care? The only time the technical signals are followed is when they happen on gold and silver..)

Both C and BAC continued to behave well today. Then I just saw this chart posted at Zero Hedge, and now I know why, and the reason is called "short squeeze". C regained the top spot for the most shorted stock on NYSE, and BAC is ranked 7th.

Ooops... C will report its Q4 earnings on Tuesday 1/18 (premarket), BAC on Friday 1/21 (premarket). They almost always disappoint... Oh well. I guess I did push my luck one day too far. C'est la vie.

BAC Update 2

I hate that bank but I couldn't help it. I bought BAC at Thursday's close (the red candle in the chart three trading days ago) when the stock didn't break down below Wednesday's breakout. (I guess I was bored of inaction.)

The target is still $14.56, but I would settle for the 200-DMA ($14.39) if that happens within the next week or two. The stop is Thursday's low, slightly below $13.

It's hilarious to hear about CNBC pumping the stock market (as if the stock market is the economy), and one of the junk that they've been pumping is the financial sector, BAC included.

As I said in the previous post, the setups for the fins continue to look good. JPM and MS are breaking out of the range, GS may be forming an "ascending triangle" pattern, and C may be forming a handle on a cup that's been forming since April.

Shoulda, Coulda: Citi, Again!

It's bad enough having missed one big opportunity in PALM. I have another one, my old favorite Citigroup (C).

I sold the shares at $4.25-ish average long time ago, and since then I was just watching, until about a month ago when I put the proceeds from selling XLF calls into C's calls. XLF March $15 calls unexpectedly went into money, and at that time C was trading between $4.20 and $4.40. I bought April $5 calls at 5 cents a piece.

Then the option went nowhere, as C lost momentum. Beginning of April, as the Op-Ex day was 2 weeks away, the option became basically worthless, a penny. No way in hell that C could go anywhere near the strike price. I left them for dead. (sound familiar?)

Then I happened to take a look at it two days ago after C made it above $4.60. The option was still 1 cents. PALM was still heavy on my mind, but C? How could this go any higher with no news? Nonetheless I called up the screen, and flirted with the idea of buying 1000 calls at 1 cents. It would cost $1000 to buy them. And probably I would lose it all when they expire on April 17.

So I didn't buy. (sounding more and more familiar.)

Then, JPM (J.P.Morgan Chase) struck this morning. (It was my carelessness - I thought major banks report next week and didn't check the exact dates.) And C went flying. 1-cent call option ended at 7 cents. After-hours trading shows C at $5.01.

Here's what C's chart look like. It is a 6-month daily chart, and since February's turnaround it is full of gaps that are not filled. When it gaps up, C seems to gap up over several days.

Today's jump was with solid volume (over 1 billion shares changed hands). Short-term (since beginning of April), there is no divergence in technical indicators. MACD histogram's negative divergence in March resulted in choppy trade but not in complete reversal.

Normally you would think it should correct right here, after a jump like C has had since April 1st, particularly after today. But traders were buying C's April $5 calls (volume was 392,352) all day today. What do I know at this point? Some drunken soul on Yahoo message board for C was calling for over $6 on Friday, $8 on Monday when Citi reports its earnings.

52-week high was last August, at $5.43.

Wham! Bam!

Major indices ended the day in red, although S&P 500 momentarily popped into green. But that didn't deter financials, and particularly those financials whose share prices have been reduced to bit sizes in the past year. If you owned any of these stocks, congratulations! (I hope you bought them in the past 4 months, though.)