Chart of the Day: A Closer Look at Bank of America Ahead of Earnings
The big bank broke out after building a flat base, the recent retreat could be a nice entry point.
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Bank of America BAC made a nice run in June after creating a flat base.
What we like to see is some tight consolidation after a move higher to digest the move (that was in April to May), then a surge up on higher volume with follow through. That was the textbook move for BAC and several other banks, but this week saw a bit of profit-taking — normal behavior after a bold move.
In the case of BAC, the recent move up was about 10% to an overbought reading, and before earnings are out next week, some investors decided it was a good spot to book some profits. That's perfectly fine, the pullback was not large and has given others the chance to add shares.
The indicators are not bullish but really that bearish, either. That is because the recent uptrend has stalled out. MACD looks to be rolling over here while momentum has been let out (stochastics, pane four). Money flow is a bit weaker but remains positive. Earnings should be a bullish catalyst to move this stock above $50.
We like Bank of America in TheStreet Pro Portfolio and rate it a two, or stockpile on pullbacks.
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At the time of publication, TheStreet Pro Portfolio was long BAC.
