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Bank of America needs a bounce off $12.30
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Lou Schizas

This article was published more than 13 years ago. Some information may no longer be current.

Mary Altaffer

Hi Lou,



What do you think? Is Bank of America Corp. good value at this point, or am I waiting for a deeper discount before I will consider buying some?



Vincent







Hi Vincent,







Thanks for the assignment. I recently screened over 60 mid cap U.S. banks for the Trade By Numbers feature on globeinvestor.com, so this is a good chance to look at one of the large caps and see how Bank of America Corp. has performed. When we examine the charts it will become evident that the best we can hope for at this point is a bounce off support at $12.30.







The three year chart illustrates the recovery from the March 2009 lows and the resistance at $20.00. BAC is currently in a sell off that started in April of 2010 and is trading below its 50 and 200 day moving averages which puts a caution flag on the track from my perspective. What is visible at this point is that there is a ledge of support in the $12.30 range if you look back to the May through July period of 2009.













The six month chart paints the picture of the sell off and a number of signals that demand we pay attention. In April of 2010 both the MACD and RSI were indicating that the stock was overbought and that sellers would take control of the market. A death cross developed in late June which provided another cause for concern.



In addition if you draw a trend line from the April high its clear that BAC has meet resistance all along the line. The inability to breakthrough resistance along the trend line suggests it would be prudent to confirm the bottom before taking on a position.







The three year chart for the US Bank Index provides a similar view as the three year chart for BAC -- however, it would be a good exercise to look at the charts for all the stocks in the index to see if there is a pick of the litter that would reward you for the effort.









Happy Capitalism!

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