Citigroup (NYSE: C) and fellow bank stocks are on a roll. However, an end to the good times may be around the corner.
Bank stocks are up an average of 13% from the November low. Citi is up 22% during that same period.
ChartWatch readers were ready for Citi’s ascent, too. In a December article, I mentioned that Citi was ready to rally.
In fact, that assessment was only part of a long string of bullish recommendations. I was looking for Citi to rally to $48 in October. I increased that target to $51.50 in a November article.
The key for those calls rested on Citi’s ability to overcome resistance near $38 (blue). The stock breached this resistance level in December and traveled to $43.25 soon thereafter.
This chart shows the price of C shares along with an important support area to monitor.
I’m just as bullish about Citi as I was in November. And I expect the shares to rise to $51.50 eventually.
However, the move that took Citi from $34 to $43 is weakening. This should result in a near-term pullback by the stock.
Though $38 should be a strong area of buying activity, it’s critical that the shares find support above $34. Citi’s bullish trend that began June 2012 would remain in play until sellers drag the stock below $34.
So as long as buyers can keep the price above $34, the shares should extend toward $51.50 within the year.
Equities mentioned in this article: C, XLF
Positions held in companies mentioned above: