Tuesday, March 30, 2010

Citigroup – Retrospective Review

The following blog entry was first entered at http://triple-screentrading.info/blog/?p=133 on the 26th of March 2010.

As I am typing this, Citigroup is making a session gain of 5% within 2 hours from the opening bell @ $4.35. This is close to a 40% gain from its last low at $3.11 back in February.

Was there a signal? Definitely! Look at the divergences between price and indicators (MACD-H and FI) showing in daily movements up to February. This would had been classified as a “Class B Bullish Divergence” based on the divergence model explained in Doctor Alexander’s “Trading for a Living”. The prices was well supported and the sell downs were not able to break down convincingly forecasting an eventual run-up.
That day came in mid-February when 2 days of very power rally broke the down-trend line before settling into a new base/support at $3.40. The rest, as they say, is history.
However, we should also be mindful of a short term bearish divergence that seems to form now as we speak. Today’s prices saw a gap up above last high of $4.22, marking a new rally that surged above the upper channel line and turning the MACD-H green. This is is all well if the new price is supported but if it dips and closes below $4.22 in the next few days, then we might have to think that there could be some over-bought scenario here. Again, I quote Doc Elder, “The rocket that had taken off has no business coming back to the launch pad.”
Trade safely and profitably.
- patty, vested in Citigroup via shares and long term call options.

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