Bank Of America Looks Weak

For those of you who like to trade Bank of America, right now it is trading very weakly compared to the market as a whole and the other banks.  Today, Bank of America was down 1.1%.

BAC 2-23

While the S&P 500 was essentially unchanged (down .01%) on the day.  The other banks were not down quite so much, JPM declined .75%, Citigroup was down .89%, and Goldman declined by .63%.

Even the late day rapid buying in the SPY had little effect on BAC.

I first noticed this on Friday of last week, when the SPY traded sideways and up for most of the week, while Bank of America was selling.

For those of you who believe in BAC as a short there are some interesting levels approaching.  There is support at $15, and another support at $14.50.

bac 2 year 2-23

I don’t know that BAC will make it through the support, but right now based upon the weakness it does look like it at least wants to re-test the support, possibly at $14.50.

Bank of America is also trading at P/E of about 45, which is way above the other major bank’s averages of about 11.  When you look at the forward P/E it is more in line with the other banks, however.

Bank of America is a notoriously difficult trade, so keep this in mind before you take any positions, but it wouldn’t surprise me to see it test that support.  If it gets below $14.50 you can be pretty confident that it will get to $14.  I think if you want the trade the entrance is up here at this $16 level though.

Keep in mind that a great earnings announcement could completely change this picture.

Looking longer term, if earnings don’t disappoint and the market keeps going up, at some point BAC is going to re-test, and ultimately blast through this long term resistance level.

bac 10 year

I don’t expect it in the immediate future, but keep in mind that if it does get through, this is going to be a trade that you want to be a part of.

If I was going to give my best guess right now we are going to see a short term test of the support, followed by the long term break of the resistance sometime this year or next depending upon the market and earnings.




Daniel Major

B.S. Degree in Economics and Finance. Professional day trader. Live and work in Manhattan, NY, NY.

Page Updated: February 24, 2015

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