Friday, 15 May 2015

BAC - downside before rate hikes

Bank of America (BAC) is currently higher by 2.7% this month, but broadly, the stock has been stuck since the initial drop in January. The financial stocks are unquestionably set to explode higher if the Fed raise interest rates, but as ever..  that is something many have been seeking for the last few years.

BAC, daily

BAC, monthly


*BAC is one of the infamous 'holy trinity' I highlighted at the start of the year. Ironically, it seems that I gave one the kiss of death - Alcoa (AA), whilst Ford (F), remains broadly subdued.

After a rough January, BAC has been broadly choppy, and is clearly stuck under $18, which is a rather key threshold.

Right now, the $18 level is around 10% higher. Considering recent price action, it would seem BAC will remain stuck under $18 until the Fed raise rates.

Of course, if the Fed fail to have confidence to initiate an attempt to at least semi-normalise rates to 2-3% (across the next 2-3 years), then BAC will have even more trouble breaking >$18 than it currently is.

*I will have eyes on picking up BAC in the late summer.. not least if the broader market has seen some sort of sig' retrace/correction, on the order of 7-10%.. at least back to sp'2000.. if not the mid/low 1900s. Most bearish outlook is for the $14s by late summer, although that won't be easy.. even if the market is briefly spooked by something.