Banking firm CIT Group Inc. (NYSE:CIT), along with most banking stocks like Sterling Bancorp (NYSE:STL) and Northwest Bancshares (NASDAQ:NWBI), has risen steadily off the November 2012 intermediate term lows. In late January, the stock broke to the upside of a multi-year trend line, and has been shuffling sideways ever since. This is setting the stock up for further gains in the near future.
A simple down-trend line connecting the dots in July 2011 and March 2012 was my focus for resistance in this stock through the fourth quarter of 2012. Much like the S&P 500, the stock’s November lows coincided with the 61.80% Fibonacci retracement of the rally from the June lows up to the September highs. The January breakout past the multi-year down-trend line near the $41 mark also move the stock past the September 2012 highs, which now acts as support. Based on the above mentioned swing, the next upside price target is just near $45.
Looking at the chart closer up reveals another bullish pattern, namely a bull flag, which is made up of the sideways consolidation from the month of February. A supportive and upward sloping 50 day moving average is not lagging far behind the stock price, and likely a good are for stops. At this point the only hurdle for the stock is to overcome the shooting star candle from Jan.29, the day of the breakout past the downtrend line discussed above.
Given the bull flag in play here, however, once the stock registers a daily close above $43.30 it should have enough momentum in it to move towards $45 and eventually closer to $47.