However, analysts' sentiment rather supports the bearish case in my opinion. Even though the WSJ article argues that “analysts are rushing to reduce estimates,” ratings still point to bullish expectations. Take Citigroup (C), which is a short position in my Covestor Technical Swing model portfolio.
Some 29 brokers are rating the stock and 21 of them have a buy rating on Citibank and only two rate the stock a sell. This leaves room for disappointment.
Don’t get me wrong: banks are not necessarily a buy, but the risk/reward for new short positions ahead of earnings is not compelling either.
Even though I am short, my goal is to reduce size or even close the position before the company releases results on October 15. “Buy the rumor, sell the fact” or better “Short the rumor, cover the fact” in this case.
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