Citi shares have been out of favor in recent weeks, but there were signs on Friday that the stock may soon be ready to lead the broad averages higher once again. We have always maintained that as long as the bank stocks continue to advance, bull-mania on Wall Street would keep chugging along.  It seems logical that such stocks would tend to outperform most others in an economic environment that allows purveyors of smoke and mirrors to thrive almost effortlessly.  How can they lose, given that a bank’s cost of goods (aka “money”), thanks to the yen carry trade and other financial legerdemain, is practically zero?

For contrast, just look at the eternally sagging chart of Ford Motor (above) if you want to see what can happen to a company that persists in manufacturing actual, real products. Indeed, why should anyone get one’s hands dirty on an assembly line when it’s possible to create, market and distribute securitized-debt products merely by tapping out words and numbers on a computer console? And there’s all that leverage, too. Even in the case of Ford, it is not those shiny new cars rolling out of Dearborn that make the company’s shares worth something, but rather the securitizable debt-paper generated by the auto manufacturer’s sundry activities and financial obligations.

Anyway, getting back to Citi, notice in the chart above how, one day a couple of weeks ago, the stock opened on a manic high, only to fall ever since. The price peak lasted for just a few minutes, but that was sufficient to enable the dirtballs who make their living manipulating the opening each day (full disclosure: I was a floor trader for twelve years) to unload all of their unwanted stock. On Friday, however, we witnessed just the opposite: Citi opened lower on a selling panic, only to rebound in mere minutes and consolidate its gains for the remainder of the day. This brazen shakedown suggests that DaBoyz are ready to start pumping the stock once again, now that they’ve bought back in at a bargain price. If so, and barring any unsettling news, we should look for the shares of this global banking giant to lead the broad averages higher in the coming days and weeks.

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London Seminar

A Hidden Pivot seminar in London appears likely, judging from the strong initial response.  If you’re interested in attending a two-day class there, probably sometime in the spring of 2007, please let me know via e-mail, including your contact information. The cost would be $1,500 USD.