Now here’s a coincidence: I was planning to comment on Citigroup’s reluctance to get in gear with the market when I received the following message yesterday afternoon from my technically savvy friend and old PSE colleague, Tom Tankka:  “Rick, any feelings about Citi’s weakness versus the market?”  Feelings? You bet. My gut feeling is that a broad rally in which Citi does not participate is telegraphing disaster, and not just a minor one. With some of the major averages hitting multiyear highs lately, Citi continues to look like hell, and that ain’t good.

Tom’s chart clearly illustrates Citi’s growing miseries. The stock broke decisively beneath its 50- and 200-day moving averages on a July 18 gap, and now the former has begun to roll over ominously:

Perhaps even more telling is the stock’s atrocious performance relative to other bank stocks:

As you look at these charts, keep in mind that Citigroup is the largest financial company in the world, and that the bull market and U.S. economy have been sustained almost entirely in recent years by a smoke-and-mirrors credit business in which Citi and just a relative handful of other multinational banks dominate. However, with respect to consumer lending in particular, Citi has been the most aggressive expansionist of them all. Could perceptions of the banking giant’s growing risk in an environment of rising short-term rates be the cause of the stock’s weakness? Without a doubt. 

For our part, we’ve been waiting eagerly for a good opportunity to short Citi shares. (There’s plenty of room to profit, as the long-term chart above shows.) But who’d have guessed this goal would become even harder to achieve with the broad averages trending robustly higher as they are now? My hunch is that we’ll still get our chance, but only after the stock has taken a wicked, short-squeezed leap from a hidden-pivot support just below, at 42.29. That would test the lowest bottom seen in more than two years – a 42.20 low recorded last October. We’ll be waiting. Meanwhile, we should regard the abysmal performance of this bellwether of bellwethers as a warning that the stock market as a whole is extremely vulnerable. Let buyers beware!