2022-12-20 • Updated
If we say that the Bank of America’s stock price is now the same $35 per share as it was around 20 years ago, it will be correct. However, the expectation of a flat line that goes across these years is different from what the chart below gives. The last two decades show a very dramatic history of this stock price performance. Just recently it got up to where it started its’ way up in 1997.
Now, seeing that one can conclude that there is no positive dynamic if the price fails to rise above its level 20 years ago. That conclusion would be false, and it becomes clear if we look at the historical chart since the IPO year.
The historical chart below shows the true picture. Since its IPO, the Bank of America has been growing in its market capitalization until now. In total, this growth has been very straightforward and consistent. In fact, it did not deviate from a straight mathematical progression until the mid-1900-s. Then it went into a phase of aggressive growth, during which the crisis of 2000-2002 forced it to get back down to the line. However, that did not stop it to reach an all-time high of $54 per share in 2006. Nevertheless, the next crisis of 2008-2010 forced it much lower than the market trajectory, opening the decade of correction. Year after year, it has been gaining back the lost positions. And eventually, at the very beginning of 2020, the stock price has come to where it us supposed to be now according to the general trend - at $35 per share.
Source: www.nyse.com
Hence, the BAC stock price is delivering growth performance in the long-run from the historical perspective, even with the ups and downs seen before. Based on this, there is little reason to assume that things may change much for this bank in the nearest future. Therefore, for a strategic investor, it looks like a buy. What about shorter timeframes?
On a daily chart, the Moving Average indicators are in the bullish order since November 2019. Taken alone, technically, that is a healthy sign. However, together with the Awesome Oscillator, the price forms a bearish divergence. Moreover, it has not yet secured the strategic height of $35 but instead just flirted with it for a while in course of consolidation at that level. That means that the correction downwards is imminent as the stock price has been rising too smoothly during the last months. For this reason, we have to be prepared for a bearish recoil at least to the support of the 50-day MA at the level of $33.50 per share. In the longer run, however, we still can expect a growing trend along the marked strategic trajectory.
The BAC stock is reported to show a generally better performance on various financial criteria that the industry average. It is in good standing with Federal Reserve, it has a strong balance sheet and a good policy of dividends distribution and capital management plan – so much as that analysts see this stock as undervalued currently.
Therefore, it seems a good purchase for a stock portfolio. To have it, you need to:
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Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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