Citigroup - BUY

Current Level: USD 35.39 Observations on the weekly chart: Since the financial crises, the stock has mostly traded in the range of 35 and 70. The stock is presently trading at the bottom of this range and could some buying interest at these levels.

Observations on the Ichimoku Cloud: The stock is trading below the cloud. Both the short term indicator and the long term indicators show that the stock is in a downtrend. It is possible that the stock may pull back to the cloud after the sharp decline in prices in the last six weeks.

Observations on the daily chart: The stock is trading below its 18 day and 50 day moving averages, which are likely resistance levels for the stock in the event of price rally from the current levels.

Observations on the momentum oscillator: The momentum oscillator is trading well below the 100 level and is in line with the movement of the stock price. Confirms the short term down trend of the stock.

Observations on RSI and Stochastic Oscillators: Both oscillators are in oversold territory indicating that the selling on the stock could be overdone. The RSI oscillator indicates a divergence that could be bullish for the stock in the near term. Summary: Since the financial crisis, the stock has traded in a range of 35 and 70. Recently, the stock has seen selling pressure in line with stocks globally. The charts indicate that the trend continues to remain sideways. The stock is trading at the bottom of the range and could see some buying interest. The oscillators indicate that the selling on the stock is overdone. If the downtrend continues, the stock has support at 27 (a price last traded in 2011-2012). It is possible that the trend may reverse suddenly, strict stop-losses should be maintained.

Resistance levels for Citigroup: 48 (+35% from current level), 55 (+55% from current level)

Support Levels for Citigroup: 27 (-23% from current level)

Trade Ideas:

Scenario: An Investor is considering entering the markets at this time (The funds allocated to the trade represents only a small portion of the overall portfolio / net worth).

Position: BUY Entry Level: Current level to 32. Target: 48 (+35% from current level), 55 (55% from current level). Stop Loss: Weekly close below 27.

An additional note: At an EPS of USD 8.15 per share, the stock has a PE ratio of 4.3 at the current price. At a dividend of USD 2.04 per share, the dividend yield on the stock is 5.7%. Assuming a global slowdown and decrease in EPS / Dividends by 25% each, the stock will continue to be relatively undervalued at current price.