I decided to take a look at my long term buy, Citigroup (C), again. Where have we gone since my last post? Not very far at all! The trend is definitely downward despite two cash infusions totaling $22 Billion dollars over the course of a few months. Will it help? Iâ€™m sure the cash infusions will help out their balance sheets but the sentiment on the Street for C, and financials in general, is pretty dour.
Fundamentally C is breaking down and I canâ€™t help but wonder when the financial beating will stop. Standard & Poors gives C a 3 star ranking, down from 5 stars a few months ago. Its current PE ratio is 36 (a bit high), with expected earnings (note: expected) to be $2.91 for fiscal year 2008. This is a considerable â€œexpectedâ€ improvement from the $0.72 earnings for fiscal year 2007 (source: S&P report).
Can Câ€™s share price go any lower? It sure could but this company has been so beaten down that Iâ€™m considering buying more. The question is, at what price?
Technically speaking, C is flashing SELL. The most current weekly chart shows a â€œdeath crossâ€ has formed and the price action is clearly below the 50 WMA. From a technical standpoint I wouldnâ€™t go near Citigroup except to wait for a pull back and short it.
Neural Net Signal
My current Citigroup neural net model is also flashing a SELL signal from its long entry back on 2/12 for market open 2/13. This trade will likely lose money but the previous short signal on 1/30 for execution on 1/31 wouldâ€™ve made you money if you closed your position on 2/12.
This analysis a toss up for me, I really want to add more shares but I fear that C might head lower. Why? Because the talk on the street is that another wave of financial calamity maybe on the way for Citigroup! Although things are getting to be overblown in my opinion I think Iâ€™ll stay on the sidelines for a bit until this gloomy cloud passes.
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