The fast-paced "Lightning Round" segment of the Mad Money program is a viewer favorite. Wednesday evening one caller asked Jim Cramer about Bank of America (BAC) : "There's going to be some weakness over the next few days, but I'm in favor of buying a few days from now," Cramer told the caller.
Let's check out the charts and technical indicators of BAC.
In this daily bar chart of BAC, below, we can see that prices have made a strong rally from November. Prices have rolled over slightly to test the rising 50-day moving average line. It looks like the trading volume has declined from March and that is not the picture we want to see. Expanding volume in a rally is preferred.
The On-Balance-Volume (OBV) line has moved higher the past 12 months to confirm the price gains. The Moving Average Convergence Divergence (MACD) oscillator has made lower highs from March and is now close to crossing below the zero line for a sell signal.
In this weekly Japanese candlestick chart of BAC, below, we can see some weakness. There is a spinning top pattern at the end of May and bearish confirmation in early June. The weekly OBV line is turning downward and the MACD oscillator is crossing to a take profit sell signal.
In this daily Point and Figure chart of BAC, below, we can see a downside price target in the $38 area.
In this weekly Point and Figure chart of BAC, below, we used close only price data. Here the software is projecting a price target in the $50 area.
Bottom line strategy: BAC looks like it can correct to the downside in the near-term. The shallower the correction and the shorter it lasts will be clues that further gains can be seen in the weeks ahead. Stay nimble.
