Schaeffer's Street Chatter Highlights the Following Stocks: Citigroup, Lennar, and Eli Lilly.

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Citigroup (NYSE:C), Lennar (NYSE:LEN), and Eli Lilly (NYSE:LLY). "Street Chatter" is a report that analyzes three newsworthy stocks that are generating a lot of attention on Internet message boards. "Street Chatter" is published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

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Street Chatter:

Citigroup

Blue-chip global banking concern Citigroup (NYSE:C) appears to be back on the acquisition warpath once again. Earlier this morning, The Wall Street Journal reported that C and the National Bank of Greece (NBG) are battling to win control of a Turkish bank. Should C win the war for Finansbank (expected to be worth more than $5 billion), it would be the biggest deal since Chuck Prince became chief executive.

The news has been rather lightly received today by C investors, and is probably being overshadowed by today's FOMC meeting. At last check, the shares were up slightly less than 0.50 percent. Recently, the equity has managed to put together a rally along the support of its 10-day and 20-day moving averages. But this move higher has brought C back into contention with overhead resistance in the 48 region. On a weekly chart, you can see just how troublesome this level has been during the past couple years.

Quick Facts on C

--Percent of analysts tracked by Zacks who rate the stock with a "buy": 57%

--Number of analysts tracked by Zacks: 14

--Short interest as a percent of float: 0.50%

--Short-interest ratio: 1.59

--Schaeffer's put/call open interest ratio (SOIR): 0.59

--SOIR percent rank: 1.00%

--Overall Schaeffer's Equity Scorecard rating: 4.0

C's sentiment backdrop is awash in bold red indicators. On the analyst front, Zacks reports that eight of the 14 brokerage firms offering up a rating give the shares a "buy." I have to believe that downgrades would be a major concern to any bullish investor on C. Elsewhere, options players have been more bullish on the security only one percent of the time during the past year, another sign that optimism toward the stock could well be overdone. Not to mention the lack of covering support on the short-selling side.

Click the following link to see a Weekly chart of Citibank since May 2004: http://www.schaeffersresearch.com/wire?ID=15658 .

Lennar

Earnings were the name of the game for homebuilding concern Lennar (NYSE:LEN) today. Bright and early this morning, LEN reported that first-quarter net earnings rose 34 percent to $258.1 million, or $1.58 per share. Revenue for the quarter advanced 35 percent to $3.2 billion. Analysts were expecting earnings of $1.55 per share on revenue of $3.07 billion. The company also reaffirmed its 2006 earnings goal of $9.25 per share, citing an order backlog of $7.1 billion.

The news had placed LEN on track for a rather positive performance on the day, until the results of the FOMC meeting sent the shares reeling. At last check, LEN was still up nearly one percent, but this is a far cry from the 2.58 percent the shares had added at their peak just before 2:00 p.m. Eastern time. From a long-term perspective, LEN still looks like a solid bullish play on the technical charts. While the shares have waffled over the near- and intermediate-terms on fears of a collapsing housing market, LEN has maintained its long-term uptrend. In fact, the stock has not closed a month below its 10-month and 20-month trendlines since February 2000. Currently, LEN is struggling a bit to regain its 10-month moving average, but round-number support at the 60 level seems to be alleviating some of the pressure.

Quick Facts on LEN

--Percent of analysts tracked by Zacks who rate the stock with a "buy": 61%

--Number of analysts tracked by Zacks: 13

--Short interest as a percent of float: 7.40%

--Short-interest ratio: 5.57

--Schaeffer's put/call open interest ratio (SOIR): 0.41

--SOIR percent rank: 48%

--Overall Schaeffer's Equity Scorecard rating: 6.5

Ok, so LEN's sentiment backdrop doesn't look all that impressive. We can see that pessimism is starting to creep slowly into the mix as the fear of a housing bubble is becoming more and more mainstream. The main concern I have with LEN is the analyst ratings; with eight "buys" out of 13 ratings, downgrades could be disastrous for the shares at this point. However, the stock's SOIR has risen sharply recently, and while the current rating is a bit more complacent than I'd like, it does indicate that pessimism is returning to the equity - a good sign from our contrarian standpoint.

LEN could benefit most from a short-covering rally, with 7.4 percent of its stock sold short. However, the shares must first overcome short-term resistance in the 61-62 region in my opinion for this factor to truly come into play.

Click the following link to see a Monthly chart of Lennar since February 2000 with 10-month and 20-month moving averages: http://www.schaeffersresearch.com/wire?ID=15658 .

Eli Lilly

Avoiding the obvious "dew" and "lily" jokes, brokerage firms clearly decided that they have had a change of heart toward Eli Lilly (NYSE:LLY) today. First, Merrill Lynch downgraded the shares to "neutral," stating that the firm's antidepressant Cymbalta is struggling to gain prescription share despite its promotional efforts. Elsewhere, Friedman Billings cut the stock to "underperform" from "market perform," saying the business continues to be pressured by four major product franchises with declining growth, a lackluster late stage pipeline, and new competition in the diabetes and depression markets.

The shares have taken the snubbing rather hard today, dropping more than four percent and threatening to break below their newly acquired 10-month and 20-month moving averages. You see, despite a recent run of good luck in the shares, LLY has struggled greatly from a long-term perspective. In fact, the stock's highs appear to be connected by a descending trendline that has its roots at LLY's highs from the beginning of the millennium. While the shares have recently reclaimed their monthly moving averages, a quick trip to the downside could easily place this support in jeopardy once again.

Quick Facts on LLY

--Percent of analysts tracked by Zacks who rate the stock with a "buy": 50%

--Number of analysts tracked by Zacks: 20

--Short interest as a percent of float: 1.10%

--Short-interest ratio: 2.89

--Schaeffer's put/call open interest ratio (SOIR): 1.08

--SOIR percent rank: 100%

--Overall Schaeffer's Equity Scorecard rating: 5.5

Sentiment is a mixed bag on LLY. Analysts are fairly evenly split down the middle, though with 10 "buys," nine "holds," and one "sell," I get the feeling that there is more room for other analysts to follow today's downgrades. Elsewhere, short-covering support is nonexistent, while options players feel they have found a top in the shares. While the latter reading could certainly work in LLY's favor, the former does us no good on a bullish play.

Click the following link to see a Monthly chart of Eli Lilly since November 2000 with 10-month and 20-month moving averages: http://www.schaeffersresearch.com/wire?ID=15658 .

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About Schaeffer's Investment Research (www.SchaeffersResearch.com)

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method .