Bank of America (BAC) is giving a boost to the financials on Monday, with the shares up 4.5% after the financial-services giant reported earnings.
The stock opened slightly lower, and at one point the shares were down almost 1%. They then flipped to positive territory, and the stock is now rallying on the day.
Of course, the preceding action coming into Monday’s session likely played a role. Bank of America shares fell in the prior four trading sessions, falling more than 5% in the process.
When JPMorgan (JPM) reported earnings on Wednesday, the stock did not react well. Then several banks reported earnings on Thursday, which only added to the downward momentum.
To see Bank of America bucking the trend is a sight for sore eyes among the bulls. But the stock was due for a rally after last week’s underperformance and this morning’s better-than-expected earnings and revenue results.
Let’s look at the chart as Bank of America stock reclaims last week’s low.
Trading Bank of America Stock
Chart courtesy of TrendSpider.com
The stock made a very nice reversal this morning, trading below last week’s low and quickly reclaiming it. Further, Bank of America stock closed below the prior 2022 low at $38.17 on Friday and then ripped back above it on Friday.
It’s still stuck, however, below the declining 10-day moving average. While it's a totally different asset and trading vehicle than bitcoin, both are being pressured lower by the 10-day.
In other words, this moving average is active resistance.
So while the stock is rallying on the earnings report, Bank of America stock needs to reclaim this short-term moving average if the bulls want some reprieve in the stock price.
If that’s the case, I have my eye on the $40 area. This zone has been key over the past month and if the stock can clear it, it opens the door to the 21-day moving average, then the 61.8% retracement near $42.
On the downside, last month’s low remains meaningful at $38.17. If the stock breaks below this level, it opens the door to a possible retest of the post-earnings low — today’s low — at $37.22.
For bulls who want to avoid that vulnerability, see that Bank of America stock stays above $38.17 in the coming days and weeks.
