Strong Signal Detected: Bank Stock Set to Rally

Recently the momentum behind the broader market has slowed as we enter a period that will likely be driven by more rangebound and consolidation type trading. Despite that, we are still looking for opportunities! Just because momentum at the index level has slowed, there are still pockets of the market that are bucking that trend and are still printing higher highs RIGHT NOW! It’s these market opportunities that my strategies and indicators are designed to target. Today, Copilot, one of my absolute favorite trading indicators that I have ever built, spotted a phenomenal looking ‘Buy’ signal for a stock in the Financial sector!

Currently there are several reasons that certain pockets of the Financials sector are displaying great relative strength compared to the broader market. Whether it be that macro-economic data remains resilient, interest rates are showing no signs of lowering soon or having a revival in the capital markets as the IPO window has opened. All of these are serving as powerful catalysts for this group of stocks. Now, this is translating into the price action and technicals for these names and that is how Copilot picked up on this great trend! The stock which Copilot spotted the ‘Buy’ signal for is Citigroup, Inc., symbol: (C). Let’s dive into the Copilot chart below to unpack what the indicator is telling us.

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In this chart we can see that Copilot spotted a clear ‘Buy’ signal for C which is indicated by the green ‘UP’ arrow on the chart (circled). But better yet, in addition to this, Copilot is also giving the signal strong confirmation that there is durable momentum and buying pressure behind this signal. This kind of timely signal from my Copilot tool is exactly the type that I’m always on the lookout for. When a signal like this comes across my screen, I know it’s time to begin searching for a potential trade so I can get in on this trend!

There are several ways to actually trade these Copilot signals, however, my personal preferred method is generally to find a call option and set up a medium-term, more surgical type of swing trade. The reason that I like to trade these signals using options as opposed to just buying the stock is this. By using call options, should the stock breakout higher, as Copilot is suggesting that it will, my calls will be set up to have outsized performance to the upside compared to the stock’s performance. Looking at the options market right now, there is a C call that at current prices would be set up for better than a 10 to 1 gain if the stock rallied by 10% come option expiration. This means if the stock was up 10%, this call would be up by more than 100% from the same move! By exploiting the leverage offered by options, this can really help to REV-UP the potential gains when a signal like this is identified.

Wishing You the Best in Investing Success,