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, comes into the week reversing off a pullback to the 20 day SMA. The pullback started as price hit the 50% retracement area of the post pandemic move higher. It had moved up there from the 78.6% retracement zone as the low since the post pandemic high in October. The RSI also turned back higher Friday as it held at the bottom of the bullish zone with the MACD dropping but positive. The pullback also started from the first higher high since the post pandemic top. There is resistance at 33 and 34.40 then 35.25 and 37 before 38.50 and 40. Support lower is at 31.50 and 31 then 30.50. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.98% and has traded ex-dividend since November 30th.

The company is expected to report earnings next on April 16th before the open. The February options chain has open interest building from 34 to a peak at 30 and then dropping back on the put side but focused at 35 then 32 on the call side. The March chain builds from 34 to a peak at 29 before tailing on the put side and again is focused at 33 on the call side. The April chain covers the earnings report and has open interest spread from 34 to 24, with a spike at 28 on the put side. On the call side it is level from 31 to 39.

Bank of America, Ticker: $BAC

Trade Idea 1: Buy the stock on a move over 32.25 with a stop at 31.

Trade Idea 2: Buy the stock on a move over 32.25 and add a February 31 Put (31 cents) while selling the April 36 Calls (32 cents).

Trade Idea 3: Buy the February/March 35 Call Calendar (14 cents) while selling the February 30 Puts (14 cents).

Trade Idea 4: Buy the April 30/34/37 Call Spread Risk Reversal (1 cent).

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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 the January options expiration in the books, saw equity markets displaying strength with both the large cap S&P 500 and Nasdaq 100 closing at new all-time highs.

Elsewhere look for Gold to continue its pullback in the uptrend while Crude Oil consolidates in a narrow range. The US Dollar Index continues to bounce to the upside while US Treasuries remain in their downtrend. The Shanghai Composite looks to continue its trend lower while Emerging Markets consolidate over long term support.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY have reset on momentum measures and both are very strong. The IWM remains the exception bouncing around in a range that has held it since for almost 2 years. Use this information as you prepare for the coming week and trad’em well.

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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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