NEW YORK (Real Money) -- Bank of America (BAC) - Get Bank of America Corp Report broke out Wednesday. The stock closed up 1.7% to $16.94 and is beginning to put some distance on the May peak. Volume was running fairly heavy. A better volume showing would be more encouraging, but the price action was excellent.
For the last four weeks, BAC has been in chop mode after an 8.5% rally off the April low. This sloppy consolidation remained just above the 200-day moving average. With this key long-term trendline underneath, the stock has been able to build a very solid short-term base.
All that was needed was a catalyst for shares to take advantage of this constructive setup. No question, the rate ramp over the last three days has lit the fuse.
BAC has plenty of room to run. The stock is well below overbought levels and remains far below the 2015 peak. This year's high, which includes the 2014 peak, is a major resistance zone between $18 and $18.20. A rally back up to this level, for a very important retest, would take another 5% of upside.
In the near term, BAC has a very solid layer of support in the $16.50 to $16.85 area. I am long the stock, added a small amount Wednesday, and will do so again as the rally develops. Upside target is $18. A close back below $16.40 would do considerable harm to this fresh rally leg.
Editor's Note: This article was originally published at 1:57 p.m. EDT on Real Money on June 3.
This article is commentary by an independent contributor. At the time of publication, the author was long BAC.