Even though Citigroup (NYSE:C) and others with vested interest in them would like to believe they’re better than a $4 stock, I don’t think at this time that is the case, and in the short term it is doubtful they’ll have much support beyond that.
We could and probably will see them make occasionally upward spurts, but they’re sure to come crashing back down soon afterwards.
It seem everyone has been trying to create the idea Citigroup is ready for a big run, with some analysts upgrading the stock and hedge funds showing some interest.
As I mentioned in my last post, as far as hedge funds and speculators, they’re interested in Citigroup for the exact opposite reasons analysts and investors are: because they aren’t in that great of shape, or at least are totally unpredictable in the short term.
That’s why hedge funds in particular have been buying up shares, as the price of the stock is experiencing the type of movement that those who like to make quick money in love to see.
Speculators and traders are among those who like to see the same thing, and a stock that moves up and down on just about every piece of news about them, or even more accurately, has a lot of stories being written about them, is the dream stock for those who know how to take advantage of volatility.
So even though there are some positive signs for Citigroup, like the government selling their stake in them, divesting of non-core assets, among other strategies, there is a long way to go before Citigroup could be called a sustainable company, and one which can be reasonably projected forward as to its performance over a period of time.
Of course in reference to the Treasury selling their stake, in the near term that’s a positive and a negative. It’s a positive for the reason government having a hand in the company, but a negative in that it can depress the shares of the company because so many are out there in the market.
Some analysts believe Citigroup is undervalued, but if they are, over time that will eventually be revealed by an increase in the share price of the stock, which could be lagging.
Either way, in the near future it’s doubtful Citigroup will break out in any way much beyond the $4 a share mark.
Stripping it down to the basics, there’s simply no real reason or reasons they should or could at this time.