Citigroup: With no clear impulsive moves off the highs, it really makes trading any stock that much more challenging. You never want to put your money on something doesn’t have a high probability of playing out. What I do notice is a larger triangle that could be playing out. This would mean that it bottomed at $21.40 and is now making corrective moves, as you can see in the chart an A-B-C-D-E triangle. These are like 4th waves in a way, that they are very frustrating to trade since they don’t have a clear path. The most likely scenario that is playing out is an E wave down that will target the $29-$27.50 region. A break above the declining tops line still doesn’t get me bullish at the time. My best recommendation at this time is to sit on your hands and watch it play out for more clarity.
Bank of America: This chart really isn’t THAT much better than Citigroup’s. With no impulsive moves off the highs it’s hard to have a clear picture of where it wants to go. What I do notice that is different from Citi’s is that it has cleared its declining tops line, and seems to be holding support along the way up. I might add it has also cleared the 50 and 200 moving averages. That’s a short-term bullish signal. What REALLY jumps out to me is the volume on the day…. 462.9M shares traded vs. its average 144.61M. That’s 4x its average! This is a signal that a breakout could be underway. So what might we expect going forward? I expect a small pullback to $10.20ish area and than blast off to $11.25. From there our next area of resistance is up at $12.15. For the downside risk… any pullback below $9.60-$9.40 makes me think twice about short-term higher levels. Conclusion: At this moment in time, Bank of America is a better buy.
