Bank of America is moving well today. The stock has more than recovered all of yesterday's losses. The stock is up over 3% on Friday and is trading at new highs for the week.
This impressive rebound may end Bank of America's five-week pullback with an upside resolution.
By the end of August, Bank of America had surged over 34% from the Brexit low. During this powerful rally phase, the stock took out multiple layers of heavy resistance with ease. As September began, though, it was becoming obvious that a pullback was needed after such a huge run. Bank of America spent the next five weeks drifting lower while working off its overbought condition.
This week the stock began to challenge a major support zone near the April/May highs as well as its 40-week moving average. Bank of America now appears to have stabilized near the $15.00 area and has solid bottom in place.
As October begins, Bank of America is set up well for a fresh rally leg. Investors should keep a close eye on the $15.50-to-$15 area in the near term. This support zone should be viewed as a low-risk buy area. On the downside, a close back below $14.80 would violate this week's low, indicating that the September pullback is not over. On the upside, a logical target is a the 2016 peak of $16.60. From current levels, a retest of this important area would take another 6.5% of upside.
This article is commentary by an independent contributor. At the time of publication, the author was long BAC.