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How Bulls And Bears Should Trade Bank Of America

Bank Of America (BAC) set its 52-week intraday high at $43.49 on June 3. The stock is up 31.2% year-to-date and is nearly in correction territory, 8.6% below this high. Longer-term this banking giant is 121.5% above its March 23, 2020 low of $17.95.

BAC has successfully implemented an entry-level checking account program called Advantage SafeBalance. This program has more than three million clients, up from .1 million a year ago. This too-big-to fail bank is bullish on the U.S. economy.  

If you are bullish on BAC, buy versus its 50-day simple moving average at $40.00. If, not, buy weakness to the 200-day simple moving average at $37.41. I show semiannual and annual pivots at $38.65 and $37.81. Beware that a close on Friday below its five-week modified moving average at $40.50 will downgrade its weekly chart to negative.

The Daily Chart for Bank of America
BAC

The daily chart for Bank of America shows that the stock confirmed a golden cross on November 23, 2020. This occurred when the 50-day simple moving average rose above the 20-day simple moving average. This stock closed that day at $27.39 as a buying opportunity.

Note how the 50-day SMA held at $29.88 on January 27. This average has been a magnet between June 14 and September 15. This is after the stock set its 52-week high of $43.49 on June 3 and its secondary high of $42.84 on August 26.

The highest horizontal line is its weekly risky level at $42.59. The middle two horizontals are the semiannual and annual pivots at $38.65 and $37.81. Just below these levels is the 200-day simple moving average at $37.41. The lowest horizontal line is the quarterly value level at $34.32.

The Weekly Chart for Bank of America

The weekly chart for BAC will be downgraded to negative on a close this week below its five-week modified moving average at $40.50. The stock is well above its 200-week simple moving average or reversion to the mean at $30.40. The 12x3x3 weekly slow stochastic reading is declining slightly at 64.00.

Trading Strategy: Buy shares of Bank of American on weakness to its semiannual, annual and quarterly value levels at $38.65, $37.81 and $34.32, respectively. Reduce holdings on strength to its weekly risky level at $42.59.

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