Hot News On The Monday Morning - CitiGroup Inc.

By ITMS GURU on February 23rd, 2009 8:19am Eastern Time

CitiGroup Inc. has the government behind it. This again was shown to the markets over the weekend as a Wall Street Journal article said the government is thinking about converting its preferred stake in the company to common shares. This is one step closer to nationalization, however, does seem to be giving the markets a little relief from the selling last week. Why? Because this investment is showing the government is not into full nationalization yet and while this will dilute shareholders, it will still keep the stock trading at current levels or above. CitiGroup Inc. has seen its stock fall from a 52 week high over over $27 to the Friday close at $1.95. Just last week CitiGroup Inc saw its stock fall 45%. Below is the daily chart.

The key to this market gaining a foothold is the government making a decision, letting the market know what that decision is, and sticking to it. This market hates not knowing exactly what will happen. As long as nationalization is possibly on the table this market will not see a longterm uptrend. There may be a bounce coming in the markets as at current levels we are very oversold. However, for it to hold over the longterm will require 100% solutions, no matter what they are.