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Although Citigroup announced a bigger than expected loss of $1.02 per share, when analysts expected C to lose 95 cents, their shares climed more than 8% in the pre-market trading. Write-downs reached over $15 billion, generating the loss.

The motive of this share raise could be that revenue exceeded their estimates. We are believers that the worst is still to come, but the inmense euphoria and bullish investors give reasons to think that the worst could be behind. A lot of uncertainty is my actual feeling in this market. The fact that C was downgraded by Moody´s and Fitch seems to have no consequences in a blind bullish market.

The 1-year chart for Citi shows that the company lost more than 50% in the last year, and better results than the desastrous last quarter, are enough for investor to be bullish;

We may see that the downtrend seems to be broken and the recovery has begun; Citi has gained 45% since their bottom on March 17, when the share price reached $17.99

Citi, one of the five most popular stocks in the moment, is the world´s largest financial company, has a higher PE (price to earnings) of 34, than indicated than investors believe that the company will recover a lot more.

A dividend yield of 5% that is going to be cut and the illusion that the recession doesn´t really exist aren´t reasons enough to make me buy this rally. 

Merrill Lynch has a neutral recommendation on this stock since they believe the worst isn´t over. Fundamentals for the conomy haven´t change (inflation, jobless claims, consumer confidence, etc) but the market is on a rally. Analysts say a correction will come, so if you are thinking of buying Citi after this rally, think again.

My recommendation is to stay away from financials; they have escalated too much with no news. “Buy the rumor, sell the news”. And the rumor is now.