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TheStreet Open House

5 Huge Stocks Ready to Slingshot Higher


Another financial stock that's showing traders a nearly identical pattern this summer is Citigroup (C). Like Morgan Stanley, Citi is forming a double bottom pattern, with shares just a hair's breadth away from breaking out above resistance at $29. Shares made their bottoms quickly -- a good sign that shows shares were able to catch a fast bid at both bottoms, prices that investors perceived to be "bargains" for shares of Citi.

Momentum, measured by 14-day RSI, adds some extra credence to Citi's setup right now. It's been in a solid uptrend since before the stock's first bottom, and the uptrend remains intact today. Since momentum is a leading indicator of price, Citi's RSI trend line bodes well for investors who want to buy this reversal pattern's breakout.

>>5 Rocket Stocks Worth Buying This Week

Again, as with MS, it's very good practice to keep a tight protective stop in Citi. Remember, your stop loss level dictates your risk on this trade - I'd suggest keeping a stop at $28 if you're risk averse. You don't want to wait until shares move down to their bottoms at $25 before stopping out; that's way too much risk.

Citigroup, one of Bruce Berkowitz's holdings, shows up on a list of 4 Large Bank Stock Picks From Deutsche Bank.

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