Last Update: 10/5/2017
It’s been about 6 months now which I’ve been holding my Citi CALLS (first entry @ 61.28 on 3/1/17 and second entry @ 60.53 on 5/4/17). And my first target was 70ish which I closed 1/3 of my positions at 68.63 on 7/3/17. So, ever since I closed 1/3 of my holding positions, Citi has been just grinding for few months here as you can see in the chart below. We have few things going on here.
- “50EMA” is acting as support last few weeks (it was strong support in May-June) = Bullish
- Horizontal pivot holding (dotted blue) = Bullish
- Head & shoulders reversal formation = Bearish
Bears would argue that Citi deserves much steeper correction to possibly 200SMA (which is current residing at 61ish) pointing to the head and shoulders reversal formation (annotated with purple in chart), while the bulls would argue that we are still in an uptrend with the rising “50EMA.” For this H&S reversal to confirm, bears would want to see the price break well-below the neckline / horizontal pivot (dotted blue). Bulls would need to reclaim 69ish to the upside and hold above it to nullify this head and shoulders formation, and I am leaning towards that scenario hence why I am still holding my rest of my CALLS since 60.53 & 61.28 (closed 1/3 positions @ 68.63). Let’s see how it plays out – more updates later.
Since my last update (above), Citi, still, has not yet confirmed that H&S reversal we’ve talked about. Sellers really needed to break below the 65.90ish last week to confirm the H&S reversal, but failed to perform. Well now, things are starting to really turn for the buyers as we have formed “Island Gap (because of the gap down on 9/5/17)” just today as it gaped up above the 68.25ish. This is a, rather, strong bullish reversal pattern if we can keep the gap open at least remainder of this week and hold above 68.25ish; if we can do that I believe new all-time high and beyond is coming. Let’s see how it plays out rest of this week. I am still holding my CALLS since 60.53 & 61.28 (closed 1/3 @ 68.63).
On 8/30/2017 post, I’ve discussed the possibility of H&S reversal formation, but in the update I’ve concluded that I was leaning towards the formation that could be nullified. Well, I think with today’s move, I can now no longer categorize as ‘H&S reversal formation’ as we’ve destroyed the ‘right shoulder’ cultivation with this bullish thrust. As long as we stay above 67.70 – 68.20 I believe Citigroup is getting ready for another leg higher. Let’s see how it plays out remainder of this week as I am still holding most of my CALLS since 60.53 & 61.28 (closed 1/3 @ 68.63).
Citi finally breaks out today to a new highs – but I think this was already implied when it reversed with the “Island Gap,” which I’ve been talking about in the last few previous updates. So, now, I am targeting 75ish before unloading some of my holding CALLS. Should the price slide in the next coming days, I would want to see 69.60ish level hold for the minor-term sentiment to stay bullish, if we can do that, I think we could see Citi moving higher rest of this month (with ups-and-downs, of course). I am still holding most of my CALLS since 60.53 & 61.28 (closed 1/3 @ 68.63) – chart.
I’ve decided to close 1/3 from the remaining positions on this gap-up move earlier today. I do think there is more room to move to the upside, and that’s why I am still holding remainder positions on it. But with ER coming up in few weeks and bit of stretched look on the Financial Sector (XLF) as a whole, I thought it might be a good idea to close some here and wait and see onto the ER on 10/12/2017. I probably will hold my remainder positions through the ER unless we see a big move to the upside (76+) before that. Holding up above this gap-up will help to support this minor-term buying pressure, if not, if the gap gets filled, it probably will act as support; what we (buyers) don’t want to see is a gap down below 71 creating Island Reversal–that would be hectic. Let’s see how it plays out. I am still holding remainder of my CALLS since 60.53 & 61.28 – closed 1/3 @ 68.63, closed 1/3 from the remaining @ 72.29.
I’ve decided to close 1/2 from the remaining holding-positions earlier today, and I will be holding remainder positions through the ER next Thursday (10/12 before open). I do think it could move higher, but we are starting to get into extended level in the short term, and with the ER coming up next Thursday–not sure if it will start to just grind here or pullback. Nonetheless, I am very satisfied with the gains.