Citigroup Chief Executive Vikram Pandit sent emails to employees stating that the bank had operated at a profit for the first two months of this year, logging its best performance since the third quarter of 2007, the last time it booked a quarterly profit. It brought lot of cheers to the market today. Citigroup closed at $1.45 today, up $0.40 (38%).

Investors are desperate for the good news. That’s why one email from Citigroup CEO pushed Dow up by 379 points (5.8%). If the Citigroup news is really credible, why not the shares jumped from $1 to, say $5? Why it jumped only 40 cents? Technical analysis shows that there is still not enough momentum in Citigroup stock. The reason is that many retail investors don’t want to jump in right now. Most of today’s action came from hedge funds and short-sellers that tried to cover their positions in Citigroup and other banks in U.S.

I don’t want to speculate on Citigroup’s profitability at this point. Citigroup CEO may be telling the truth now. We will know the facts only when they report quarterly results. It appears that the government bailout is working. That itself is a big relief!

Citibank news triggered good rally in Asian markets too. Right now, all Asian markets are up. Japan stock market jumped 4.4%, Hong Kong market jumped 3%. South Korea, Taiwan and Australian markets also went up.

I personally don’t believe that this rally can be sustained. This could be one of the bear market sucker rally. We are going to deal with the current recession for many more months to come. Deep rooted recession will not go away by one piece of good news. However, I welcome and feel good about the news from Citibank just because there is not much good news these days. Feeling good is different, investing is different. Knowing the difference will make lot of difference in your bank balance.

Related Link: Banking Stocks