Shares of Bank of America (BAC) made a new low for its move down Wednesday on the heels of its latest earnings report. Let's check on the charts again.
In our review of Bank of America on June 17 we wrote that "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."
In the daily bar chart of BAC, below, we can see that the shares have weakened since early June. BAC has declined toward the $38 area, which may or may not provide some support. The area acted as support in April but things are different now.
The On-Balance-Volume (OBV) line is weakening and the Moving Average Convergence Divergence (MACD) oscillator has crossed below the zero line for an outright sell signal.
In the weekly Japanese candlestick chart of BAC, below, we can see that a number of spinning tops in May marked a high. Prices are now correcting but still above the rising 40-week moving average line.
The weekly OBV line has turned lower and the MACD oscillator has crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of BAC, below, we can see that the software is projecting the $35-$34 area as a potential downside price target. This would mean that the support around $38 is broken.
In this weekly Point and Figure chart of BAC, below, we can see the same downside price target on the daily chart. Further weakness if possible.
Bottom-line strategy: BAC has rolled over and the selloff is young. Continue to avoid the long side of BAC.
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