Citigroup Shares (C) Under Pressure Despite Beating Estimates

Citigroup Inc. (C) is trading lower by 1% in Tuesday’s pre-market session, despite the financial giant beating top and bottom line second quarter 2020 estimates by healthy margins. Earnings per share (EPS) of $0.50 per share beat the consensus by$ 0.23, while revenue increased 5.4% to $ 19.77 billion, against expectations of $19.06 billion. Credit losses increased during the quarter due to the difficult U.s. economic environment, rising to 3.89% of loans, compared to only 1.82% in the second quarter of 2019.

Key Takeaways

  • Citigroup Inc. (C) said for the second quarter of 2020 financial results that beat consensus estimates by healthy margins.
  • Wall Street is bullish on shares of the financial giant, with a “Strong buy” consensus, but this optimism rests on the success of the re-opening of the economy in the united States and around the world.
  • With Citigroup stock lost ground despite the earnings beat, a rebound above $60 would improve the technical outlook, while a decline through $48 would increase the chances for a sale in the palm of March.

Wall Street currently, the rate of Citigroup stock as a “Strong buy”, with 13 “Buy” and 2 “hold” recommendations. No analyst is recommending that shareholders sell their positions at this time. The imbalance reflects the optimism of the revaluation as the result of the first quarter fell sharply to an eight-year low. However, these measures assume a success of the reopening of the economies of the world and not of second coronavirus wave of this winter. Two assumptions seem unrealistic given the COVID-19 surge in the majority of U.S. states.

Citigroup Long-Term Chart (1990 – 2020)

<Adjustment for a 1 for 10 reverse stock split in May 2011, the historic yields values that are much higher than those which are traded in real time.>

The price action has completed a double bottom reversal at the end of 1990, leaving behind a powerful trend that has published seven splits in 2000 amounted to $551.48. Who has scored the most high for the next seven years, in advance of a sharp decline in the market decline found support in the $220s in the fourth quarter of 2002.

A rebound in 2004 impasse of less than 25 points below the 2000 level, producing a narrow side action, followed by a 2006 breakout which failed after the publication of all time at $570 at the beginning of 2007. Selling pressure has increased in the fourth quarter and has accelerated during the economic crisis of 2008, the removal of the stock in a multi-decade low in the single digits. It bounced in the middle of$50 to the third quarter of 2009, the establishment of a resistance level which was not mounted until 2017.

The resistance, or a resistance levelis the price the price of an asset is satisfied by the pressure on its way by the emergence of a growing number of sellers who wish to sell at this price.

Higher lows in 2011 and 2016 absorbed the last vestiges of the sale of the pressure of the decline in the market, giving way to a surge after the presidential election. The rally made limited progress, given the massive size of the escape, trim just above $80 in January 2018. A fourth quarter, sales in the high $40 has ended a trading range that has held good in January 2020 breakout after the failure of the addition of three points, the strengthening of the resistance above$80.

Citigroup Short-Term Chart (2018 – 2020)

The pandemic is driven by the decline broke the support of the range before the stock found support at the bottom of $20, while the rebound in the second quarter stalled on five weeks in the low $60. The price action since that time has been to test the reassembly of 2018 low, but the stock is compressed between this level and the major resistance at the 50-month and 200-day exponential moving averages (EMAs). A move outside this range would have triggered a strong buying or selling signals, telling players in the market, to go with the flow, more or less.

The balance volume (OBV), the accumulation-distribution of the indicator gives a door a strong advantage in the bilateral put in place, dropping back in March 14-month low in May and cutting of minors to the upside in July. This reflects strong investor pessimism, which is logical because commercial banks are highly cyclical, gaining ground in a period of economic expansion and sales during recessions and recoveries.

On balance volume (OBV) is a technical trading momentum indicator that uses volume flow to predict changes in stock prices. Joseph Granville the first to develop the OBV tons in 1963 book Granville’s New Key to stock Market Profits.

The Bottom Line

Citigroup is losing ground despite beating second-quarter 2020 consensus estimates, but the stock is still trading above the support near the 2018 low and below resistance at the 200-day EMA. This helps establish a “rock and a hard place” scenario in which a rebound above $60 would improve the technical outlook although a decrease due to $48 would increase the chances for a sale in the palm of March.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.


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