Citigroup buy or not buy? Technical Analysis on Citigroup?

In one of my regular coffee session, one of the investor brought this topic up. He told me he plan to buy some of the banking stock. He is looking at BAC, WFC and C.

"BAC and C are quite exciting. But if you are a trader, C give you wider price range swing and probably could use some technical to help you up.", I told him.

"That is what I think so.", he said.

The investor sent me below article this morning. One of the investor (Cramer) talk about 6 reasons to buy citigroup (from source: http://www.cnbc.com/id/34419773/):

1. Wells Fargo, as a result of buying Wachovia, has too much mortgage exposure. More mortgages mean more potential foreclosures, and that will hurt earnings. Citigroup shouldn't have that problem.
2. Citigroup does more business overseas, where its reputation is much more intact. Cramer said the international footprint would make Citi a great call on worldwide trade expansion.
3. The government's 34% stake, totaling 6 billion shares, in Citigroup is not an issue, especially when the average daily trading volume is in the hundreds of millions of shares. Whether Washington slowly sells its position or holds on for a higher price, Cramer called it a non-issue.
4. Citi has already dropped significantly ahead of the offering, Cramer said, much more than it deserves. That gives investors a great, great entry point.
5. The share price is just $3.70, a near lottery-ticket price with somewhat similar potential. While the dollar amount doesn't matter, Cramer does bless this as a single-digit speculation play, the kind that investors seem to love so much.
6. Cramer thinks Citigroup could triple in price over the next three years. As the company cleans up his balance sheet, the resultant profits will restore its book value. And banks trade as a function of book value. So the refrain going forward is, "$12 by the end of 2012."

I still remember not long time ago, the CEO requested approval from investor to increase common stock. Most of the investor do not like it, it might further dilute the stock.  Below are the summaries of the change in one of the CEO letter (http://www.citigroup.com/citi/fin/data/ceoletter090910.pdf):

• Increased the number of authorized shares of common stock from 15 billion to 60 billion;
• Eliminated the voting rights of the holders of common stock on any amendment(s) to the restated certificate that relates solely to the terms of any series of preferred stock so long as such series of preferred stock is entitled to vote on the amendment(s); and
• authorized (but do not require) the Board of Directors to effect a reverse stock split, at any time prior to June 30, 2010, at one of seven reverse split ratios as determined by the Board of Directors.

Frankly speaking, I do know how to use fundamental approach to value Citigroup. Please let me know if you know how to do that ;) But to make our life more exciting, below is some of the technical analysis I used for Citigroup. From the analysis graph (3months or 6 months data), it showed that Citigroup is trending down on 12/14/2009. There is no up trend signal yet. Base on technical, we probably need to wait couple days more for up trend signal.

Citigroup - 3 months

Citigroup - 6 months