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Citi Incites Stampede


Is this a bear-market rally, or something more?


The stock market is on a tear this morning on the heels of a statement by CEO Vikram Pandit that Citigroup (C) has a profit for the first 2 months of 2009.

In a letter sent to employees Monday, Pandit said the first-quarter performance so far has been the bank's best since the third quarter of 2007 - the last time it recorded net income for a full period. Based on historical revenue and expense rates, Citi's projected earnings before taxes and one-time charges would be about $8.3 billion for the full quarter.

Pandit declined to say how large credit losses and other one-time items that would at least partially offset profit, have been.

So Citigroup has a profit, excluding what? Pandit didn't say.

In other news, I'm announcing that I have $10 billion in my bank account, except for the portion of the $10 billion I don't have.

Bear in mind - the market isn't rallying because of this nonsense. It's rallying because at a minimum, it was technically very oversold and was ready to rally. Furthermore, this rally has the potential to be much stronger than most think.

Click to enlarge

People have been asking for an update of the E-Wave count I've been following. The last update I offered was on January 9, 2009 in S&P 500 Crash Count - Wave 4 Triangle.

On October 28, 2008 in S&P 500 Crash Count - Wave 3 Update I posted this interpretation of what might happen.

Click to enlarge

The above idea worked pretty well. Moreover, it now appears as if the S&P 500 has traced out 5 clean waves down, ending at 666. If that's the case, and wave 5 doesn't extend, it won't be fun to be net short at this point - whether lower lows are ultimately coming later or not.

For now, let's party like we have profits - whether we do or don't.

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No positions in stocks mentioned.
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