Monday, February 7, 2011

Chartology: A Lesson from Bank of America (BAC)

A month ago, Jan. 7 we posted "Goldman Sachs: "Buy Bank 0f America Calls" (BAC; FAS; FAZ; XLF)" and spouted off:
The stock closed yesterday at $14.44, down six cents.
The April $16 calls were last quoted at 50 cents bid-51 offered.
We have some more ideas after this piece from Barron's The Striking Price column...

...The late November bottom came on the 30th with $10.91 intraday and $10.95 closing prints.
The January gap up is worthy of note. The stock closed at $13.34 on Dec. 31 and opened at $13.85 on Jan. 3. That's just shy of 4% and large enough that the stock may want to revisit some or all of the gap before breaking decisively higher....
Here's the chart:

The next area to look at is.....?

(how 'bout that Jan. high, right before the stock filled the Dec. gap, and a problem area going back to the July gap down)