April 21, 2010
Shares of Citicorp Inc (NYSE: C) have moved up and down in a 10% trading range over the past week. Is a breakout ahead? Or is the opposite?
With huge moves on huge daily volume of late, one question must first be asked about shares of Citicorp. Is it even safe to trade shares in this company?
Two years ago Citicorp was trading in excess of $55.00 a share. From December 2009 to February 2010 Citicorp was trading around $3.00 a share.
A wise trader once told me never to buy a stock that costs less than a pizza. There is always a reason!
Citicorp has tacked on 67% since those February lows. You might say that the potential gains are worth the risk. We do not feel that way. There are far too many good trades out there, in companies that are not going to shed 10% in a day, or even more, on a bad news event.
Citicorp closed Tuesday, April 20 at $4.97 a share. The September 2008 bear market rally highs are at about $5.50 a share, some 10% higher. This will be a strong resistance level for Citicorp to overcome.
If Citicorp can make a solid close above $5.50 a share, extremely high risk traders could make a case for a bullish trade, assuming they use very tight risk management rules to get them out if the trade falls apart.
Otherwise, we would stay far away from shares of Citicorp and find stocks that have good setup patterns and odds that favor their completing those patterns.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
Disclosure: no positions