Bank of America Corporation: Purchase to Continue the Global Trend and Support a Strong Quarterly Report

Bank of America Corporation, #BAC [NYSE]

Finance, Banks, USA

Bank of America Corporation is an American financial conglomerate that provides a wide range of financial services to individuals and legal entities. Included in the four largest US financial conglomerates, along with Citigroup, Wells Fargo and JPMorgan Chase.

Financial indicators of the company:
  • Index – S&P 500;
  • Market Cap – 289.03 B;
  • Income – 26.29 B;
  • P/E – 11.19;
  • Beta – 1.61;
  • ROA – 1.10%;
  • Avg Volume – 57.62 M;
  • ATR – 0.66.

The investment idea is to capitalize on the fact that stocks follow the global uptrend due to an optimistic corporate report and an upgrade of institutional funds.

Analytical review:

1. Strong quarterly report for the 3rd quarter. On Wednesday, October 16, the financial conglomerate announced higher than expected earnings for the third quarter, as revenue from investment banking contributed to higher earnings. Bank of America Corporation reported that earnings per share (EPS) counted to $0.51, which is 24% less than the same period last year. At the same time, the figure exceeded the expectations of Wall Street analysts by 5%. The company's revenue counted to $22.8 billion, which is slightly more than in the same quarter last year.

Net interest income, which is a key indicator of bank profitability, increased by more than 1% to $12.187 billion. According to company management, investment banking fees increased by 27% to $1.5 billion. Income from consumer banking services, which is a significant part of the creditor’s revenue, grew by 3% to $9.7 billion.

2. Support for institutional funds. Warren Buffett’s investment firm, Berkshire Hathaway, plans to increase its stake in Bank of America Corporation to more than 10%. Earlier, large investment houses Keefe Bruyette and BMO Capital Markets raised their forecasts for #BAC shares to $36.

Analysis of financial indicators and company multiples indicates the possibility of further growth of the issuer.

Trading Recommendations for Bank of America Corporation Shares
  • Support Levels: 30.30, 29.75, 29.25
  • Resistance Levels: 31.05, 32.00

The bullish sentiment prevails in the shares of the company. Currently, #BAC quotes are testing annual highs. The key support and resistance levels are 30.30 and 31.05, respectively. Indicators signal the power of buyers:

  • - The price has fixed above 50 MA and 100 MA;
  • - The MACD histogram is in the positive zone and continues to rise.

We recommend opening positions from the key levels.

If the price fixes above 31.05, an upward trend is expected to continue. The immediate goal for profit taking is the round level of 32.00. When tracking positions, we recommend using a trailing stop.

Alternative option. If the price fixes below the support level of 30.30, it is necessary to look for entry points to the market to open short positions. The movement is tending to 29.75-29.25.

by JustForex, 2019.10.22

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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