Bank of America Corp. (BAC) shares continued its bullish move higher following its second quarter results. The second largest US bank reported expense reduction, better than expected profit and improved bond trading revenue. Today’s 3.29% stock price advance to $14.11 occurred after the company reported earnings of $0.36 a share, a beat from the analysts’ consensus of $0.33. Revenue dropped ~8% to $20.6 billion, but topped expectations of a $20.5 billion print. Personnel costs declined 2% from 2Q15, reflecting lower incentive compensation, as well as progress in reducing legacy mortgage related servicing costs. Bond trading impressed by rising 22% on the year to $2.62 billion.
Price action on the BAC daily chart shows that the bullish move occurred following the selloff that was triggered following the Brexit outcome. After today’s earnings beat, price recaptured both the 50-day and 100-day SMA(s). The current bullish stance might not find major resistance until the 200-day SMA, which currently trades at the $14.76 level. Further upside may target the $17 region.
If we see downward pressure hit shares, initial support will come from the $13.80 level. Major support remains the psychological $12 handle.The Trade: Buy BAC at $13.95, with a stop loss at $13.75 and a take profit at $14.75. The Risk/Reward Ratio is 1:4