Bank of America Is Near Its 52-Week High - Is the Stock a Buy Ahead of the Earnings Report?

Can Bank of America shares, now trading near their 52-week high, break out? Let's check the charts.
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Bank of America  (BAC) - Get Report is up a bit more than 1% Tuesday, a day ahead of its scheduled earnings report.

Investors have reason to be optimistic, with bullish reactions to both Citigroup  (C) - Get Report and JPMorgan  (JPM) - Get Report after both banks on Tuesday delivered better-than-expected fourth-quarter results. Citi has hit highs as a result, while JPM is close to doing the same.

Tuesday’s rally has Bank of America setting up for a potential move to 52-week highs as well, provided the results due out Wednesday morning are strong enough.

Of course, there’s a chance the company disappoints, just as Wells Fargo  (WFC) - Get Report did. Wells Fargo shares are down nearly 4% on Tuesday as a result.

Let’s look at the charts to get an idea of a few key levels.

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Trading Bank of America Stock

Daily chart of Bank of America stock.

Daily chart of Bank of America stock.

The strength in Bank of America stock -- and bank stocks overall -- has been pretty clear over the past few months. In October, BofA bottomed near $27 and has rallied 31% to its current price near $35.50.

In late December, resistance showed itself at $35.70, and when Bank of America shares pulled back in early January, support came into play near $34.50. 

We’re dealing with a tight $1 trading range now, and investors will look for that to resolve either higher or lower.

On a pullback, first see if support comes into play near $34.85. That’s where BAC stock will find channel support (blue line) and the 20-day moving average. A move below this mark puts the $34.50 support level on watch.

If that fails, see if the 50-day moving average and $33.50 can buoy Bank of America. If it can, the bulls will likely look to bid the shares higher. If not, the stock will need more time to consolidate.

On the flip side, if Bank of America rallies on earnings, let’s see whether the stock can take out the current high at $35.72. 

More important, let’s see if it can close above current resistance at $35.70. Above that mark and a continued move higher into the upper-$30s is on the table.

The bottom line: below the 50-day moving average and Bank of America stock needs more time to consolidate. Above the $35.70 mark and shares can continue charging higher.