Bank of America falls become attractive

Shares of Bank of America (NYSE:BAC) recovered two weeks ago to an area of higher technical resistance, where relative to the risk on the upside benefit has weakened a lot for a while, and in fact, falls now appears attractive for a strategy on the value.

The severity of the totality of the revival of risky assets, and in particular U.S. actions since February, has caught many by surprise, including myself. For a good part of the multi-mensuales financial rally, like the one seen in the shares of Bank of America, the company has been lagging market in general. But when at the end of March/beginning of April turned, they began to show leadership and generally kept the market afloat.

At the same time, however, the underlying economic data or corporate profits have improved, and interest rates at their end of the yield curve are kept under surveillance, i.e., for now remain very tight interest margins for U.S. banks.

The long term chart shows that shares of Bank of America, two weeks ago, again reached its long term support line. If technical analysis 101 can we serve as a guide, then this line of prior support should act, at least for now, as resistance.

Bank of America shares have returned to its long term support line, now resistance

Bank of AmericaBank of America

Source: Saxo Bank

The daily chart shows that the value moved from the lows of February in what seems a classic a-b - C of counter-trend move. It should be noted that the horizontal line of the resistance now Note that the horizontal line of resistance now also roughly lines up with the stock's network 200-day simple moving average, adding to overhead resistance.

Horizontal resistance roughly corresponds to the BAC stock's 200-day MA, solidifying resistance

Bank of America diarioBank of America daily

The greatest risk to this strategy is the Federal Reserve, which is to say that if the Fed throws a rhetoric of what awaits the market, then, interest rates and shares of banks they could see more rises despite technical resistance.

Parameters of the strategy

Entry: Short in Bank of America or buy at low prices put options or options put spreads if the value is listed at 14.50 dollars.