Citigroup Stock Setting Up for Rally After Healthy Pullback

NEW YORK (TheStreet) -- Early last week, a three-day winning streak drove Citigroup (C) past its 2014 high. This high-volume bullish action is showing signs of exhaustion over the last three sessions. Citigroup may need a healthy pullback before the powerful bull run off the late March low can get back on track.

The rally that began on March 26 has carried Citigroup more than 13% higher at last week's peak. Along the way, the stock has left behind layers of support. The initial support zone includes the May high near $55.35 as well as the January/March highs at $54.70.

A light-volume drift down to this solid area would offer a very low-risk buying opportunity for patient bulls. The current 12-week rally would remain intact, and would be set up well for resumption once a short-term base is built.

Citigroup traced out a similar bull leg in the following the mid-January bottom. The stock rose more than 16% before topping out on March 12, as it approached the initial January high. Shares then staged a healthy pullback that retraced roughly half of the rally. After the pullback had run its course, Citigroup quickly returned to rally mode in early April.

This second and current rally leg appears be headed for a repeat of this pattern. Considering the weak bond action of late, a new version may be shallower and of shorter duration, but the end result will be the same: an excellent buying opportunity for Citigroup investors. 

Click here to see the below chart in a new window.


At the time of publication, Morrow was long C.

More from Opinion

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters

2 More Reasons to Sell All Your Stocks and Run Away

2 More Reasons to Sell All Your Stocks and Run Away

Sean Hannity's Link to Trump Lawyer Raises Questions: Doug Kass Insider

Sean Hannity's Link to Trump Lawyer Raises Questions: Doug Kass Insider

Netflix Blowout Earnings Remind Investors of One Thing: This Company Is a Beast

Netflix Blowout Earnings Remind Investors of One Thing: This Company Is a Beast