Citigroup Update 2 Weeks After Reverse Stock Split

Today's article provides a first look and Citigroup update 2 weeks after their reverse stock split took effect on Monday May 9, 2011.

Many times popular news about a stock builds up hype to an event itself, and then afterwards traders move on to "the next big thing" not taking advantage of the knowledge they can learn from following up to see how the stock reacted over time.

This article is a perfect example of the possibilities and I hope it helps to learn something from this and the series of articles which led up to it:

Back in March of 2009 (March 19, 2009 to be exact, 10 days after the then-market bottom) Citigroup announced they were considering some sort of reverse stock split. (Article I posted at that time: Citigroup announces intentions of potential reverse stock split) The stock initially jumped higher and then retreated a bit when people realized that it was just at the beginning stages of planning.

After several long months, prices moved up and down until about 24 months after the initial announcement, March 21, 2011, when they announced the would be performing a 1-for-10 reverse stock split effective May 9, 2011. I wrote an article at the time trying to point out my experience with reverse stock splits from the past and my opinion on Citigroups plan: Citigroup announces 1-for-10 reverse stock split trading effective date.

Monday May 9, 2011 came along and Citigroup begins trading post reverse stock split. I've included the same chart below of Citigroup (ticker symbol C) that I posted on the weekend just prior to Citigroup beginning to trade post reverse stock split for review. Take a look:

Citigroup 1-for-10 Reverse Stock Split

Now for the update, take a look at the chart below which is exactly 2 weeks (10 trading days) after C began trading post their infamous 1-for-10 reverse stock split:

Citigroup Update 2 Weeks After Reverse Stock Split

It's pretty scary looking to me. Prices have declined over 11% in the 2 weeks time period. Back on the previous chart above you'll see that I had posted a potential Elliott Wave pattern taking place and sure enough, the move since then has confirmed the pattern exactly. Another thing to notice is that in a typical/ideal Elliott Wave pattern, either wave 1 or wave 5 is longer then the other, as opposed to both being equal. You could have taken the last chart and seen that wave 1 was indeed short, and used that to help come up with a target price level, and would have been right again.

I hope some of my regular readers were able to take advatage of the previous artilces I wrote leading up to today's price levels in Citigroup by taking on or adding short positions in the stock. If so, 10+% in 2 weeks time from a high probability trade setup is welcome to me any time...

So far, Citigroup's plan of action has been deteriorating shareholder equity. To think that this has only been 2 weeks is scary. Where will Citigroup be trading in May, 2012?




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