This Bank Stock Has A Lot to Lose

Amid anecdotal reports suggesting the long bank trade is extremely popular, investment banking concern Citigroup Inc (NYSE:C) stands out as one of the top hedge fund holdings in the sector. Unfortunately, C's chart isn't quite as bullish as the consensus outlook on financial stocks right now -- and at the same time, we're seeing evidence that bonds are due for a contrarian bounce. The combination of a policy-tightening Fed and a bond rally could turn out to be a killer for bank stocks, and C has a lot to lose if big-money investors abandon the sector.

Technically speaking, Citigroup stock is currently staring up at $73.53, which represents a $200 billion market cap -- a potentially stiff psychological resistance level. Plus, the now-overhead $70 region represents double the stock's 2016 closing low, setting up another technical roadblock for the shares. Even more troubling, a head-and-shoulders pattern on a daily chart targets a move down to the $60 area.

Sentiment toward C among analysts is overwhelmingly bullish, with 11 of 18 following the stock carrying "buy" or "strong buy" ratings. This leaves the stock extremely vulnerable to downgrades as the technical breakdown continues.

Our Schaeffer's Volatility Index (SVI) for Citigroup comes in at 28% and ranks in the 6th percentile of its annual range -- hinting at unusually low volatility expectations at the moment. Also, our recommended put has a leverage ratio of negative 8.57, and will hit its profit target on a 10.19% drop in the underlying equity.