Thursday, 23 June 2016

BAC - bizarrely strong

Whilst the main market closed broadly higher - ahead of the UK vote, there was notable strength in financials, with Bank of America (BAC), settling +3.2% @ $14.04. Considering the Fed appear increasingly concerned about the growth/jobs outlook, a rate hike in the near term looks extremely unlikely, and that will surely keep BAC pinned lower.

BAC, daily

BAC, monthly


BAC is my most favoured of financial stocks.. at least from a 'safety' perspective.

In terms of price, BAC is a real mess, having been broadly stuck under the resistance of the $17/18s since spring 2014. Indeed, it has been a full TWO years, and with a Feb' low of $10.91, BAC remains unable to break up and away, as the Fed - along with other central banks, refuse to raise rates.

The financials are going to suffer for as long as rates remain low... or as is the case in the EU/Japan... actual negative rates.

Even Deutsche Bank (DB) has been loudly proclaiming NIRP as threatening the very social fabric of the EU.

Until BAC can clear the 200dma - currently in the $15s, I can't take the current rally seriously.

From a grander perspective, the bull maniacs need to see BAC attain a monthly close in the $18s to have real confidence that 'everything is going to be fine' in the long term.

... and frankly... that looks almost impossible to see any time within the next few years, as the Fed aren't even going to raise rates above 1%... as market consensus would agree with.