4 Trade Ideas for Citigroup: Bonus Idea

A sign at the Citigroup Center is shown Thursday, April 16, 2009 in New York. Citigroup Inc. posted better-than-expected results for first quarter.reports earnings Friday, April 17.

Here is your Bonus Idea with links to the full Top Ten:

Citigroup, $C, made a top in September and then started lower. It paused in November and then continued lower in December. After finding a bottom it built a “V” shaped recovery, getting back to the November levels quickly. But then it paused and consolidate for nearly 3 months before breaking resistance and moving higher. It reached a 78.6% retracement of the drop 2 weeks ago and pulled back. Friday saw it break the short bull flag to the upside though, setting a target to 73.

The RSI is strong and holding high in the bullish zone with the MACD flat but positive. The Bollinger Bands® have flattened but there is a lot of room to the upper Band. It also looks ready to print a Golden Cross. There is resistance at 70 and 71.50 then 73.50 and 75.25. Support lower comes at 68.40 and 66.50 then 65. Short interest is low under 1%. The company is expected to report earnings next on July 15th. The stock pays a dividend with a yield of 2.59% and the stock starts trading ex-dividend on May 3rd.

The May options chain shows the largest open interest at the 65 put. But there is larger open interest on the call side found at 70 and then 65. June options see the biggest open interest on the put side at the 60 strike and progressively lower as the strikes rise. On the call side it is biggest at 70. September options are the first to cover the next earnings report and they are just starting to build open interest with a focus at the 62.50 put and from 65 to 75 on the call side.

Citigroup, Ticker: $C

Trade Idea 1: Buy the stock on a move over 70 with a stop at 68.

Trade Idea 2: Buy the stock on a move over 70 and add a September 67.50/65 Put Spread ($1.00) while selling the September 77.50 Call $1.00 credit).

Trade Idea 3: Buy the September 60/70/75 Call Spread Risk Reversal ($1.05).

Trade Idea 4: Buy the June/September 75 Call Calendar ($1.30) and sell the September 60 Call ($1.00 credit).

After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which winding down the last days of April sees the equity markets remain strong on longer timeframe and mixed but good on the shorter timeframe.

Elsewhere look for Gold to possibly reverse high out of a pullback while Crude Oil pauses in its uptrend. The US Dollar Index has changed to a short term uptrend while US Treasuries are biased higher. The Shanghai Composite and Emerging Markets are both pulling back in their uptrends.

Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are strong in the weekly timeframe with the QQQ leading the way at all-time highs and the SPY right behind with the IWM improving. On the daily timeframe the QQQ may be ready for a pause and it might be time for it to pass the baton to the IWM which is back at resistance. The SPY meanwhile remains strong and a fraction from new all-time highs. Use this information as you prepare for the coming week and trad’em well.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.