Citi Stock Flashes Bearish Alarm Ahead of Earnings

Citigroup stock has run into long-term resistance

Patrick Martin
Apr 10, 2019 at 12:10 PM
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Banking giant Citigroup Inc (NYSE:C) is down 0.4% today, trading at $64.92. As the big bank gets set to follow its sector peers into the earnings confessional early next week, Citigroup stock is flashing a bearish alarm on the charts. 

Since bottoming at $48.42 on Dec. 26, Citigroup stock has fought back to add 34%. However, 2019 gains have been contained by the equity's 160-day and 200-day moving averages. And from a longer-term perspective, the shares are now back within one standard deviation of their 52-week moving average, after a lengthy stretch below this trendline.

Over the past 15 years, C has endured similar run-ups 19 other times, after which the equity was down an average of 6.97% three months later, per data from Schaeffer's Senior Quantitative Analyst Rocky White. From the stock's current perch, a similar three-month pullback would put Citigroup stock at $60.50 around the mid-July.

Weekly Stock Chart C

Options bears have been ramping up their exposure on C, ahead of the big bank's earnings report, due before the open this Monday, April 15. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day put/call volume ratio of 0.81, which ranks in the 82nd percentile of its annual range. While this shows calls outweigh puts on an absolute basis, the high percentile ranking means the rate of put buying has been accelerated.

It's a similar trend today, with 21,000 puts on the tape -- 1.6 times what's typically seen at this point in the session. The weekly 4/12 64.50-strike put is most active, and just behind it is the April 63 put. It looks like new positions are being initiated at both strikes.


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