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

If the latter scenario unfolds, then C 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 C 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.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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