Monday, 2 November 2015

BAC - financials rising on hopes of higher rates

Whilst the broader market settled significantly higher in the sp'2100s, there was more pronounced upside power in financials, with Bank of America (BAC) settling +1.7% @ $17.06.  A monthly close in the $18s would be extremely bullish for 2016... with subsequent targets of $20, and then $23 by late spring.

BAC, daily

BAC, monthly


First, regarding the Fed and interest rates...

It has been a VERY messy year in terms of the Fed. They had ample opportunity to raise rates.. but having repeatedly delaying, such uncertainty was a primary cause of the capital market upset in August.

Currently.. my best guess (although it IS also a hope).. is that the Fed raise rates at the next FOMC of Dec'16th.

A 25bps move would finally be 'lift off'.. and open the door to further periodic increases.. eventually to 2-3% or so by late 2017.

I realise some might call that 'crazy talk'.. but I am of the 'old school' economic view, and higher rates ARE bullish for financials... and the broader economy.

Technically. if BAC can attain an $18 monthly close.. it will open the door to a relatively straight up move to $20.. and then $23 by late spring.. which would make for a natural pre-summer cycle top.

First things first though.. lets see if BAC can attain an $18 close for Nov... or far more viable... this December.