4 Trade Ideas for Bank of America: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Bank of America, $BAC, made a low in March and then tried to move higher. It had a weak move through May before starting higher. It stalled at the 200 day SMA and fell back. It spent 4 months in tightening consolidation under the 200 day SMA and making higher lows before a gap up in November and eventual move to a new higher high. The RSI is rising in the bullish zone with the MACD flat and positive.

There is resistance at 29.35 and 30.60 then 32.55 and 34.10 then 35.10 and 35.75. Support lower comes at 28 and 26.60 then 25. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.46% and it started trading ex-dividend on December 3rd. The company is expected to report earnings next on January 19th.

The December options chain shows big open interest at the 30 and 25 strikes on the put side. This is dwarfed by the open interest on the call side at the 28 and 30 strikes. In January the largest open interest is at the 25 strike on the put side but large from 32 all the way down to 20. It is large on the call side from 25 to 40. The January 22 Expiry chain is the first to cover the next earnings report, but it is just starting to trade and has little open interest. The February options build open interest from 27 down to a peak at 20 on the put side. On the call side open interest is focused at 30 and 29 then 35.

Bank of America, Ticker: $BAC

Trade Idea 1: Buy the stock on a move over 29.50 with a stop at 28.

Trade Idea 2: Buy the stock on a move over 29.50 and add a January 28/25 Put Spread (55 cents) while selling the February 33 Call (56 cents).

Trade Idea 3: Buy the December/February 31 Call Calendar (87 cents) and sell the January 25 Put (19 cents) .

Trade Idea 4: Buy the February 25/31 Bullish Risk Reversal for 68 cents.

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with just 18 trading days left in the year, sees equity markets seemingly starting to sprint to the finish.

Elsewhere look for Gold to continue its short term move higher in the pullback while Crude Oil slowly drifts higher. The US Dollar Index continues to make new lows while US Treasuries continue in their downtrend. The Shanghai Composite looks to be primed to push through resistance higher while Emerging Markets continue their uptrend.

The Volatility Index looks to continue to close the February gap lower making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY are both taking smaller steps higher as the IWM is leading the charge. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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.

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