Saturday, February 9, 2013

Bank of America

Update: Still looking good even though  she is doing a little consolidatiing here. Intermediate uptrend line is still working as is the Primary. Solid red line shows the Stop loss CBL at $11.56. Hoping nest week she will stretch her legs a runs a bit. 




Looking at the weekly chart the original entry signal was fired around 9/3/2012. Since that point we have another higher pivot low so we can draw a primary uptrend to base all of our new buys using the daily chart. As long as the primary uptrend stays intact, we will be able to find entry’s using Bull Flags and CBL’s.


Okie Dokie, on January 7th was the beginning of a Bull Flag and to the patient buyer, a new entry point. Not every Bull Flag works, but at least it is a tool to help put the odds in your favor. During the Bull Flag, the 50 day moving continued to rise and price never crossed over. That’s another bonus. January 25th we had the breakout we were looking for. Here is the problem, the next day price did not follow to the upside, so I would not have taken the bait. The next 4 days price continued to fall and appeared to me that this was going to be a head fake. I started to draw a secondary signal called the CBL, Count Back Line. Eventually priced reversed again and broke out the top of the CBL on 2/1/13. So the next day was the day of purchase, but once again, price did not follow through, so it was another wait and see. On 2/5/13, price once again closed above the CBL so the next day and entry could be made as long as price was not falling. Finally on 2/6/13, you could have safely entered and bought at any price between $11.73 and $11.97.

Ok, now that you are in we need to put a paper mental stop loss on BAC if price does not follow through. So as of the close Friday, 2/9/13 your Stop loss should be $11.37. I do not use real live Stop losses because of high frequency computer trading. These computers can see your stop loss market orders and will at times flash prices in either direction to fire those orders. I personally think this should be outlawed. Mental stop loss is hard but if done correctly every time, it will save your butt. If your stock price closes below your paper stop loss, then the next day you are required to sell. The only time this is hard is when price is rising the next morning and to each person I have to say, you’re on your own. We all know the rules, so bend them at your own risk.

Currently BAC is looking good because we a new short term uptrend that we can draw and it help anticipate where price is heading. 50’s look good and the primary uptrend is also good. So as long as we do not have any severe pullback days in the overall market, BAC should be able to rise from here. The Financial sector is also in good shape and rising and that should help. BAC is a hold and still a buy at these levels.

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