Trade BofA Using Moving Averages

Updated from Jan. 25

By Stockpickr Guest Columnist Ira Krakow

In a previous article, I discussed how to trade General Motors(GM Quote) using basic chart analysis. Looking at movements in price and volume over different time frames is a great start, but it's by no means the only arrow in the chart technician's quiver.

Technicians like to draw all sorts of lines, called indicators, over the basic chart, to highlight trends that identify buying and selling opportunities. In this article, I will show how to use the most common technical tool, the moving average, to time your buy or sell.

The financial sector has been in the news a lot lately. In a recent video, Dan Fitzpatrick analyzed the chart of Bank of America(BAC Quote), whose stock price has been affected by how the deal to acquire Merrill Lynch will be funded. (It appears that we, the taxpayers, will end up on the hook, but that's a bit off-topic.)

Can we use moving averages to help us grab a quick profit in BofA?

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In Monday trading, Bank of America closed at $6.00 per share (down 3.9% for the day and down 57.4% year-to-date).