Bank of America (BAC) and Citigroup (C)

In the past few months we have seen a disproportionate number of shares traded for both BAC and C in the S&P 500, and both have caused quite a stir among investors and the public alike. Based on technical trend analysis, there's a couple of points that can be made:

1. Both are in uptrends, and both favor long positions but BAC is in a much stronger uptrend than C.
2. BAC has cleared almost all major resistances, and the only two that remains are $18.00 and $18.50. C, on the other hand, must reach ~10.50 before clearing the final major resistance.

From a fundamental standpoint, BAC has diluted their shares from 4.5 to 8.6 billion shares in 1 year. This magnitude of dilution has essentially cut the EPS in half, and it is highly unlikley BAC will ever return to the glory day highs of mid $40 PPS. The maximum I see BAC is around low 20's unless they buy back their shares. C, on the other hand, has only faced a 10% (450mil) share dilution since last year. But the problem is they're already insolvent if it wasn't for the government backings.

Believe it or not, the initial signal given to sell these two stocks occurred back in 2007. The charts below shows the weakening process and eventual breakdown. By sticking to trends, it would've been easy to see why they were great shorts that one could have held for a sizable profit in a span of 1 & 1/2 years. The purpose of this analysis is to demonstrate the power of trends, and why one should trade with the trend regardless of external views. Being right in fundamentals doesn't always translate to profits.