Citigroup Saves The Market

After a volatile and down week, traders and investors were prepared for some follow-through on the downside in Monday's session.

Premarket trading in the S&P 500 Index futures gave an early indication that this indeed may be the case, as it sliced through Friday's nearly two-month low (1807.25), reaching 1803.25.

Once again, however, the “buy the dippers” rescued the index from breaching 1800 and rallied the index back to unchanged (1811.75) by 8:00 a.m.

At that time, a beleaguered Citigroup C reported better-than-expected Q1 EPS of $1.30 versus $1.18 estimates. EPS were also up six percent from the same quarter last year and revenue came in at $20.10 billion versus $19.61 billion estimates.

Not only did traders take advantage of the better-than-expected results to rally Citigroup from the mid $45.00 range to $47.00 in a matter of minutes, but rallied the futures index from unchanged (1811.75) to 1819 during that same time period.

Related: Is It Time To Sell The Rips Instead Of Buying The Dips?

It was as if the good results from Citigroup automatically signaled an end to the recent decline. Because of the $0.12 beat by the company, every company in the index was now undervalued.

As a result, the index continued to rally before finally peaking at 1824.75 right off the opening bell. Shortly after the open, Citigroup continued to move higher before finding resistance at $47.74, which coincides with its March 4 high ($47.79), while the index swooned nearly 10 points before finding support at 1815.50.

Since that time, the index has rallied back to make a new high for the session, but Citigroup has not. After a decline to $46.98, the issue has rebounded, but has yet to make a new high for the day.

In essence, the catalyst for the premarket rally was not much of a factor once the broad market opened. Traders have instead taken the cue from Citigroup, that it is now time to jump back into momentum stocks. How that correlation can be made? No one knows, but price doesn't lie.

Priceline PCLN is trading higher by 15 points. Netflix NFLX has added three points.

A few of beaten-down bio-tech stocks have rebounded, as well. Biogen BIIB is higher by nine points and Celgene CELG has tacked on a point.

With earnings season now ramping up into full gear, expect similar trading action over the next few weeks. Focus on the headline stocks as their earnings are released and closely follow the trading action in the issue, as well as the entire index.

If the headline stocks such a Citigroup post better-than-expected earnings, then the index may very well be back at all-time highs in a hurry. And last week's dip will go in the books as just another buying opportunity in this bull market.