We may have to raise the odds that Citigroup will survive the collapse of the banking industry. Clearly, any firm that can lay off 75,000 employees is gearing for survival in tough times. “We will be the long-term winner in this industry,” vowed CEO Vikram Pandit. Who could doubt such resolve? Even so, when the layoffs already announced have taken effect, the bank will still have 300,000 workers. That’s not exactly running lean and mean, but it would appear Pandit has left the door open for even more job cuts. “There is still a lot of rebalancing ahead of us,” he told employees at a closed meeting yesterday. “The coming year could be a difficult one for our clients and customers.” Citi shares have been falling relentlessly for 18 months, but they still have at least a little ways to go, according to our technical runes. The stock hit a 12-year low last week when it touched 8.27, but we’d be inclined to bottom-fish just a bit beneath it -- at 7.09, a Hidden Pivot support. Were the stock to reverse and hit 11.21 first, signaling a bullish “impulse” on the hourly chart, that would suggest that the recent bottom at 8.27 might turn out to be an important one. If so, it would hold bullish implications not only for financial stocks, but for the stock market in general, since bank shares have been a reliable bellwether for some time. How does that square with our prediction that the shares of Goldman Sachs, currently selling for around $62, will eventually trade for $29? Our guess is that Goldman would get a reprieve if Citi stops falling. But the hard choices Citi has been making still lie ahead for Goldman, whose global infrastructure continues to reflect the opportunities of a financially
Tuesday, November 18, 2008
DJIA Dow Industrial Average (8274)
– Posted in: Current Touts Free Rick's PicksYesterday's 234-point decline looks like a meaningless blip on the daily chart, and you'd have to drop down to lowly the 15-minute bars to find anything to trade. There is in fact a midpoint support at 8234 that can be used as a minimum downside target for today, but it doesn't look reliable enough for bottom-fishing. If it's breached by more than 10 points, though, still lower prices would be likely, with 7895 as an outside possibility for today.
E-Mini Dow (8240)
– Posted in: Current Touts Free Rick's PicksSomeone in the chat room posted a downside target tonight at 7649 that looks like the best of an unappealing lot. The midpoint at 8282 has already been busted, so in theory we should be using 7649 as our minimum downside objective. In practice, however, any short to that number -- presumably initiated near 8282 -- would be subject to a nasty bounce from the visually obvious support of the three bottoms just below 8000 that were recorded in the last five weeks. _______ UPDATE: Surprise surprise, the futures opened soft after hitting an overnight high of 8281. YM may be able to fake its way above the pivot this morning, since DaBoyz are having some moderate success pumping buoyancy into Goldman, if not into Citi.
AAPL Apple Inc (88.58)
– Posted in: Current Touts Free Rick's PicksWe'll continue to bid for some January 70 LEAPs of (2010) until we get them, since our downside target for the stock is much lower: 57.20. Today, bid 13.60 for a single LEAP, good only on the opening. ________ UDPATE: Lower the bid to 12.80, day order. These puts are going to be harder to buy than I'd originally thought. Apple opened firm, and one might therefore have expected that sellers would hit any put bid in sight. In fact, the LEAPs traded down only slightly, opening at 14.05. They do not trade like ordinary puts, probably, because their relatively low implied volatilities make them good as gold. That's because once you own one, it is easy to lock in a profit by spreading it off against much pricier put options due to expire over the next few months.
Microsoft (19.32)
– Posted in: Current Touts Free Rick's PicksIf you've been wondering how bad it could get for the shares of this world-class mediocrity and shameless peddler of digital swill, there's a Hidden Pivot target at 3.87, although it seems a bit farfetched right now, even to us. Still, with Windows 7 (aka Vista Service Pack 1) on the not-too-distant horizon, it's not inconceivable that investors could punish the company severely for taking a second called strike versus the competition (which at this point includes a resurgent AAPL, among others). If the firm didn't have $40 billion in the bank -- ah, but which bank!? -- we'd infer that 3.87 is a done deal.
