The following is a little Citigroup ( C ) stock technical analysis for March 18, 2009. Today, Citigroup is running up to a major resistance level ( where traders are likely to sell ) at the 50 day moving average. I use the 50 day moving average as a medium term indicator, the 10 day moving average as a short term trading indicator, and the 200 day moving average as a longer term indicator. These moving averages can tell you strength or weakness in a specific stock. For instance, the Dow Jones closed over the 10 day moving average last week - you can see the end result as to where we are trading today.When stocks close over their 200 day moving average, it usually means the long term trend is changing to the upside. When a stock closes back below the 200 day moving average, it means the longer term trend is starting to break down and shareholders are beginning to sell shares. Having said that, the 50 day moving average is very key!
Citigroup is testing its 50 day moving average today as you can see in the above chart. This is an area where traders and people caught at much higher prices are likely to sell. If Citigroup would close over the 50 day moving average, it would be a huge bullish signal for further upside. You then would use the 50 day moving average as a support level which you would put your stop loss order.
Resistance: Citigroup is testing the 50 day moving average for the first time since October 2008. I would be hesitant to buy here unless you get a close over about $3.25. A close over $3.25 could set up a run toward the next resistance at $4.00 and $4.32. Yes, this might seem unlikely since Citi was just $1 but things tend to overshoot on the upside as they do on the downside.
Support: Citigroup now has support at $3 and then $2.52 ( today's low ). A break below $2.52 would bring in more sellers and you could retest $2.
Bottom line: Citigroup Buy, Sell or Hold? I wouldn't be buying here, I'd wait until after earnings on April 17, 2009. I might think about holding however if I already owned it!
If Citigroup closes over $3.25, I will trade it during the day but not hold it overnight.
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