Either today's swoon in Citigroup (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 Citigroup should pivot to the upside with some power in an effort to re-probe resistance at 49-50.

If the latter scenario unfolds, then Citigroup 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 Citigroup 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.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.