BAC : 07MAY 2009

BAC(12.69) -Bank of America Corporation

There were bullish connotations on the chart of this stock over the last few days and finally, yesterday it gained over 17% in just one session.  This stock is driven by high sentiment, negative and positive both, as it has been giving huge gap ups and gap downs since its March lows(see chart).  Therefore, yesterdays gap up may not be a breakaway from the range unless it keeps giving higher highs and higher lows in the days ahead.  Momentum traders can go long with stop at its yesterdays low at 11.50. 

However, the trend is strongly up and it is a buy on declines.  Short term traders can buy intraday declines with final stop at 11.20 on closing basis.  Traders with risk appetite can keep a stop at 10.70. Medium term is positive until it holds above 9.0.  Those who can not get the opportunity of buying on declines should go for call options of strikes from 13 to 16 if premium is not very high. The projected target is 16.5.

There is no formidable resistance visible until the band between 16.5 to 16.8.  It is more likely that this stock is charting its 5th wave up from its 20th Feb low.  So, this wave could terminate in the given band and a correction would ensue.  Thereafter, the magnitude of the envisaged correction would determine the long term outlook for this stock.  Keep watching!  

(The disclaimer would apply as given on this blog intemittently)

Chart: Quote.com