City National Corporation is a bank holding company and a financial holding company. City National provides a range of banking, investing and trust services to its clients through its wholly owned banking subsidiary, City National Bank. The Bank is a national banking association and operating through 79 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay area, Nevada and New York City. As of December 31, 2011, it had five consolidated asset management affiliates, in which it held a majority ownership interest. It also had one unconsolidated subsidiaries, Business Bancorp Capital Trust I, as of December 31, 2011. City National Corporation has three segments: Commercial and Private Banking, Wealth Management, and Other.
To analyze City National’s stock for potential trading opportunities, please take a look at the 1-year chart of CYN (City National Corporation) below with my added notations:
The first level to notice on CYN is the $50 level (black), which was resistance in January, and is now acting as support. Next, you can see the current $55 resistance (green) that CYN formed last month. Below the $50 level is the common level of $45 (red) that was not only resistance from August through December, but it also became support in March.
The nice thing about CYN is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you could either short CYN on rallies up to a $5 level or on any breakdowns of them. If you want a long play instead, you could buy CYN on a pullback to a $5 level or on any breakout through one of those levels.
The Tale of the Tape: If CYN breaks above $55, or pulls back to $50, you would want to enter a long play. However, if the stock were to break below $50, a short trade should be made and the $45 level would come back into play for a potential trade as well. Regardless of which level you enter at or what side of the trade you are on, always remember to set a protective stop.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT