Shares of Bank of America (BAC) have been making lower highs for the past 12 months but they have not made a new low since March. Is the stock making a bottom or is this just a pause before new lows?
Let's check out the charts and indicators on this Action Alerts PLUS position.
In the daily bar chart of BAC, below, I can see that the shares are currently trading below the 50-day moving average line with a neutral slope and the declining 200-day moving average line. The On-Balance-Volume (OBV) line has been weak since February and suggests that sellers of BAC have been more aggressive than buyers.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero and trying to improve.
In the weekly Japanese candlestick chart of BAC, below, I see a weak setup. The shares are trading below the declining 40-week moving average line. The trading volume has been shrinking since March and that tells me that investor interest is waning.
The weekly OBV line has been in a decline for at least the past two years and that suggests we have been seeing some major liquidation (selling) of this bank. The MACD oscillator is bearish.
In this daily Point and Figure chart of BAC, below, I can see a potential upside price target in the $31 area.
In this weekly Point and Figure chart of BAC, below, I used close-only price data. Here the software is suggesting the $19 area as a downside price target.
Bottom- line strategy: I don't know what fundamental news will be impacting shares of BAC in the weeks ahead but the charts are looking vulnerable. Avoid the long side of BAC.
(BAC is a holdings in TheStreet's Action Alerts PLUS portfolio. Want to be alerted before the portfolio buys or sells these stocks? Learn more now. )
