4 Trade Ideas for Citigroup: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Citigroup, $C, rose higher in April out of consolidation and stalled to digest the move in July. It continued sideways until a push higher in September and then quickly settled into consolidation again, this time in a descending triangle. It broke that triangle to the upside establishing a target to 79 on the triangle break and 81 from the longer movement.

The RSI is turning back higher in the bullish zone showing strength and the MACD is stalling in the bullish zone. There is resistance at 77.25 and then 82, but from 2008. Support lower sit at 74.25 and 71.50 followed by 70. Short interest is low at 1% and the company is expected to report earnings next January 16th before the open.

The December options chain shows biggest open interest at 72.50 on the put side and at 75 and 77.5 on the call side. The January 12 Expiry options have biggest open interest at the 77 call strike. The January options, the first covering the earnings report, have sizable open interest spread from 50 to 75 on the put side, but focused from 70 to 80 on the call side.

Citigroup, Ticker: $C

Trade Idea 1: Buy the stock now with a stop at 73.

Trade Idea 2: Buy the stock now and add a January 75/70 Put Spread ($1.30) for protection through earnings. Sell the February 80 Calls ($1.07) to pay for most of the protection.

Trade Idea 3: Buy a March 70/77.5/82.5 Call Spread Risk Reversal (30 cents), selling the 70 Put and buying the 77.5/82.5 Call Spread.

Trade Idea 4: Buy a January/March 77.50 Call Calendar ($1.20).

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After reviewing over 1,000 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into the FOMC meeting and December options expiration week sees the equity markets showing some life. Perhaps the Santa Claus Rally has begun.

Elsewhere look for Gold to continue lower while Crude Oil stalls in its uptrend. The US Dollar Index is biased higher in consolidation while US Treasuries mark time sideways. The Shanghai Composite continues to retrench after a long run higher and Emerging Markets are seeking support as they retest breakout levels.

Volatility looks to remain very low keeping the wind at the backs of the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ remain strong on the weekly timeframe with the IWM showing some potential weakness. The SPY is also strong on the daily timeframe while eh IWM and QQQ are turning up but still looking for new highs. Use this information as you prepare for the coming week and trad’em well.

 

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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