Citigroup Reports Earnings With Stock in Trading Range

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Citigroup Reports Earnings With Stock in Trading Range

On December 26, Citigroup Inc. (C) shares saw a “key reversal.” This happened when the stock hit a 52-week low of $48.42 and then ended the day at $51.44, up from a high of $50.24 on December 24. This laid the groundwork for huge gains as 2019 started.

Citigroup shares gained strength after closing above its yearly pivot at $55.32 on January 8. On July 24, the stock reached its 2019 high of $73.08. This high was above its second half pivot at $67.85, which had served as a magnet between August 1 and October 10. The top end of the trading range is marked by the July 24 high, while the lower end of the range is shown by the quarterly value level at $61.27.

According to Macrotrends, Citigroup stock is attractively valued, with a P/E ratio of 9.73 and a dividend yield of 2.97%. When it publishes earnings before the opening bell on Tuesday, Oct. 15, the fourth largest of the four “too big to fail” money center banks is likely to record EPS between $1.96 and $2.00. The bank has outperformed earnings per share projections for 18 straight quarters.

In the long run, Citigroup stock has fallen 35% from a high of $75.24 on September 21, 2018 to a low of $48.42 on December 26, 2018. The stock finished at $70.10 on Friday, October 11, up 34.7% year to date and 44.8% above the low.

The daily chart for Citigroup

Refinitiv XENITH

The daily chart for Citigroup clearly illustrates the trading range of $61 to $73, with the stock reaching the upper end of the range ahead of the earnings announcement on Tuesday. The December 31 closing of $52.06 was a significant input into my proprietary statistics, and the yearly pivot is $55.32, which is below the range. The mid-year closing of $70.03 was also included into my calculations, resulting in a semiannual pivot of $67.85 for the second half of 2019. Another input to my analyses was the third quarter closing of $69.08, and the outcomes include a fourth quarter value level of $61.27 and an October pivot of $69.48.

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The weekly chart for Citigroup

Refinitiv XENITH

Citigroup’s weekly chart is bullish, with the stock trading above its five-week modified moving average of $68.33. At $61.44, the stock is trading above its 200-week simple moving average, or “reversion to the mean.” During the week of Aug. 16, Citigroup tested its “reversion to the mean,” which was a buying opportunity at $60.89.

The weekly slow stochastic reading of 12 x 3 x 3 is expected to grow to 62.88 this week, up from 59.84 on Oct. 4. This rating was 8.13 at the December low, which was below the 10.00 threshold as a stock that was “too cheap to ignore,” which was also a buy signal.

Buy Citigroup shares on weakness to the quarterly value level of $61.27 and sell on strength to the July 24 high of $73.08. The monthly and semiannual pivots for the stock are $69.48 and $67.85, respectively.

How to apply my risky and value levels: The latest nine monthly, quarterly, semiannual, and annual closing are used to calculate value and risk levels. The first set of levels was determined at the closure on December 31, 2018. The initial yearly level is still in effect. The end of June 2019 saw the establishment of new monthly, quarterly, and semiannual levels. The semiannual level is still in effect for the second half of 2019. The quarterly level shifts at each quarter’s conclusion, therefore the closing on September 30 set the level for the fourth quarter. Because monthly levels vary at the end of each month, the closing on September 30 created the monthly level for October.

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My hypothesis is that nine years of volatility between closing is sufficient to infer that the stock has factored in all probable bullish and negative occurrences. Investors should purchase shares on weakness to a value level and sell shares on strength to a risky level to capture share price volatility. A pivot is a value or danger level that has been breached within its time period. Pivots operate as magnets that are likely to be tried again before their time horizon ends.

How to utilize 12 x 3 x 3 weekly slow stochastic readings: I chose 12 x 3 x 3 weekly slow stochastic readings after backtesting numerous techniques of measuring share-price momentum with the goal of finding the combination that produced the fewest false signals. I did this after the 1987 stock market meltdown, and I’ve been pleased with the results for more than 30 years.

The stochastic reading for the stock encompasses the previous 12 weeks of highs, lows, and closes. A raw assessment of the disparities between the highest high and lowest low vs the closing is available. These levels are tweaked to allow both quick and slow reading, and I discovered that slow reading worked best for me.

The stochastic value ranges from 00.00 to 100.00, with readings over 80.00 indicating overbought and readings below 20.00 indicating oversold. Recently, I noticed that equities tend to peak and fall 10% to 20% or more quickly after a reading climbs over 90.00, which I refer to as a “inflating parabolic bubble,” since a bubble inevitably bursts. A reading less than 10.00 is frequently referred to as “too cheap to ignore.”

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The author has no holdings in any of the stocks mentioned and has no intentions to start new positions in the next 72 hours.

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