The Street Runs Red With The Blood Of Banks Again. Citigroup Continues Its Assault On Zero

Not long after Eddie Lampert, the massive hedge fund operator, was loading up on Citigroup near its peak price, a few of my friends and I were talking amongst ourselves that Citi could reach $5 a share. (Eddie, I'm available for consultation.) Today the stock plunged right past $5 to close at $4 and change.

Last month Citi received $25 billion from the Treasury. Today, Citi's market capitalization reached that of the government bailout - $25 billion. Do we conclude without the Treasury injection that Citi's market capitalization would be zero? Not directly. But maybe. Citi's market capitalization equaling the dollar amount of the Treasury bailout has a fair amount of irony to it.

We have watched professional prognosticators line up one right after another time and again to take a bullet in the head by recommending or investing in banks. As I've said before, I model bank liquidity and there is nothing I see that points to anything other than more trouble. And, since the last time wrote that last sentence, Citi has dropped another 75%. It appears some learn lessons the hard way. Mostly by losing other people's money.

We have highlighted the 1995 pivot as a *potential bottom* for the S&P and as of today Citi itself has officially reached its 1995 price point. At this point do we have any reason to believe the S&P will not eventually follow?