With shares of Bank of America (NYSE:BAC) trading around $11.50, is BAC an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for a Stock’s Movement
Bank of America is in an industry that has taken some heat and is in the early stages of a recovery. The company made major headlines during the financial crisis and continues to do so now. However, the financial industry is the backbone of our economy, and love it or hate it, it is needed. As a major player in this industry, Bank of America has the resources it takes to turn things around and continue its advance.
T = Technicals on the Stock Chart are Strong
Bank of America’s long term trend leaves little to be envious of. It is currently trading at about one-fifth of the price it was in 2007 and looks to be in a recovery from a long-term descending trend. From a 2011 low of $4.92, the stock has more than doubled, in a consistent uptrend consisting of higher highs and higher lows, and it is now trading near $11.50 per share. Bank of America stock also broke above a long-term descending trendline last year, so it may very well be headed towards $15 per share, a major price level.
Moving averages may help interpret a trend with more ease. Essentially, the placement of the stock price relative to its key moving averages is important as well as the direction and order of these averages. What are the key moving averages? The 50-day, 100-day, and 200-day simple moving averages. How do Bank of America’s simple moving averages look? Today, Bank of America stock is trading above its 100-day and 200-day and consolidating around its 50-day simple moving average…