Bank of America (NYSE:BAC) started to drop in September, finding a bottom at the end of December. It bounced from there and rose back to the 50% retracement level of the drop from the Financial Crisis in January. It held there for a while and then pushed higher only to fall back. It has bounced around in a channel all year, in fact, oscillating around that 50% retracement. Into the new week, the price is at the top of the range.
As it sits there the RSI is rising in the bullish zone with the MACD rising and positive. The Bollinger Bands® are also running higher. There is resistance at 31 and 31.40 then 31.80 before 33. After that, there is the 61.8% retracement at 35.15 and then you need to look back to 2008 to find it at 37.60 and 40 before 43.20 and 45.30. Support lower comes at 30 and 29.60 then 29 and 28. Short interest is low under 1%. The stock pays a dividend-yielding 2.34% as of Friday and starts to trade ex-dividend September 5th. The company is expected to report earnings next on October 16th.
The August monthly options chain shows the biggest open interest at the 30 call strike, with good size from 29 to 33. On the put side, it is biggest from 35 to 29. On the September chain it is more focused with largest open interest at the 30 call and size at the 31 as well. On the put side it is biggest at the 29 strike with good size at 30. Finally, on the November chain, the first to include the next earnings report, open interest is spread from 24 to 31 on the put side. On the call side, it is much bigger and found from 29 to 34.
Bank of America, Ticker: $BAC
- Buy the stock on a move over 31 with a stop at 30.
- Buy the stock on a move over 31 and add a November 30/27 Put Spread (65 cents) while selling the September 32 Call (39 cents).
- Buy the August/November 32 Call Calendar (73 cents) and sell the September 28 Put (21 cents).
- Buy the November 27/32/34 Call Spread Risk Reversal (25 cents).
Elsewhere look for Gold to continue to mark time in its uptrend while Crude Oil pauses in the move lower. The US Dollar Index seems looks to move higher in consolidation while US Treasuries pause and consolidate their move up. The Shanghai Composite and Emerging Markets are both in consolidation mode with no indication that will change.
Volatility looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all agree with this on the shorter timeframe and are moving higher. But with the SPY and QQQ making all-time highs and driving to the upside on the longer timeframe, the IWM continues to lag and remains in a range. Use this information as you prepare for the coming week and trad’em well.
Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.