Bank of America (NYSE: BAC) shares rose from $23.2 to $28 in less than five days and the current price is $27.3. The technical picture suggests that the price could rise above $30 this November, but there are some obvious risks involved in buying Bank of America stock.
Fundamental analysis: Bank of America is a stable bank with a good position in the market
Bank of America shares have been on an upward trend in the last few days, and so far there is no sign of a trend reversal. Pharmaceutical company Pfizer announced that it will have a coronavirus vaccine available in the United States by the end of this year, which further supports Bank of America shares.
When trading these shares, investors should keep in mind that Bank of America is a stable bank with a good position in the market. Bank of America recently reported that net interest income in the third quarter was down 17% year on year. It is also important to note that revenues were down $2.5 billion (or 11%) year-over-year and the operating results for the third quarter of 2020 were not well received by the market.
The scale of the decline has raised some concerns, but even with the COVID 19 pandemic, this bank’s business is doing well. Bank of America reported earnings per share of $0.51 for Q3 2020 ($0.01 more than last year), which is very good for the current situation. The provisioning charge was $1.4 billion, a significant improvement over the previous two quarters.
The U.S. stock market continues to be supported by optimism about the prospect of a split Congress, news of COVID-19 vaccines and a lower risk of major political changes. Joe Biden won last Saturday’s presidential election in his native Pennsylvania and finished 46th in the U.S.
On the other hand, concerns about sluggish economic growth amid the ongoing pandemic continue to dominate financial markets. The US reported more than 130,000 new cases in one day, and the pandemic brought US hospitals to the brink of capacity.
There are some risks in buying shares of Bank of America, but BofA’s shares are currently attractively valued and analysts say that this bank is positioned to weather the COVID-related storms.
Technical analysis: the bulls have control over the stock price
Data source: tradingview.com
If we take a look at the chart above (period of one year), we can see that the price of this stock dropped from $35 to $17.95 and then began to rise. On this chart, I have highlighted important resistance and support levels.
The important support levels are $26 and $24, $28 and $30 represent the resistance levels. If the price jumps above $28, it would be a “buy” signal and we have the open path to $30.
A rise above $30 supports the continuation of the upward trend and the next price target could be around $32. If the price falls in the coming period, any price in the $20-25 range could be a very good opportunity to invest in Bank of America shares.
Bank of America shares have been on an upward trend in the last few days, and so far there is no sign of a trend reversal. Bank of America’s dividend is safe, and the company is handling the coronavirus threat very well. Bank of America has paid more than $18 billion in dividends to its shareholders in the last three years, and this number may increase in the future. Pharmaceutical company Pfizer announced that it will have a coronavirus vaccine available in the United States by the end of this year, further supporting Bank of America’s shares.