Citigroup Should Hold Here

Either today's swoon in Citigroup (NYSE: C) is a retest (so far successful) of the August 6 low at 45.02 or the continuation of a new downleg that started at the establishment of the August 8 rally peak at 49.88. If it turns out to be the former, then C should pivot to the upside with some power in an effort to re-probe resistance at 49-50.

If the latter scenario unfolds, then C will press still lower and break 45.02, at which point the stock either could plunge towards a test of very major support at the Aug 2006 low of 42.91 or make marginal new corrective lows (set a bear trap) and reverse to the upside with a vengeance.

Right at this moment, my inclination is to expect C to hold here, and then to stage a rally towards 48-49, which will not represent a major bottom but a coordinate within the establishment of a prolonged bottoming phase.

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