The financials and particularly the money center banks have been an underperforming sector of the stock market this year. The technology space, the S&P 500 index, and the DJIA, as represented by the S&P Select SPDR ETF’s, have all bested the financials by a large margin.
But there is one relative performer in the money center banking group and it is Citigroup (C), which is up 18% year-to-date. The stock closed up in trading on Wednesday making a nearly nine year high, and now look ready to breakout of their recent consolidation phase.
The daily chart shows Citigroup trading in a large rising triangle pattern in the first half of the year, below horizontal resistance in the $62 area. It broke above that resistance in June and made a perfect measured move up to the $69.25 area, which became channel resistance, with the $66 area acting as pattern support. There was a sharp bounce off channel support this week and the strong Wednesday session finished right at channel resistance. A breakout looks imminent.
If Citigroup does break out, the channel pattern targets a price objective measured by taking the height of the channel and adding it to the breakout point. It projects up to the $73 area or about 6% upside.
The S&P Financial Select SPDR ETF (XLF) bounced off its 200 day moving average this week and on Wednesday closed right on its 50 day moving average, suggesting some positive price momentum. If it is anticipating a recovery in the sector, it looks like Citigroup is ahead of the curve and should continue to outperform it competitors.