Bank of America Stock's Recovery Stalled in March

Bank of America Corporation (BAC) is the third largest of the four "too big to fail" money center banks. This banking giant ended 2017 with total assets of $1.769 trillion, according to data from the FDIC. This bank controls 10.2% of the total assets in the banking system, making it clearly "too big to fail." Bank of America is due to report quarterly earnings before the open on Monday, April 16, and the stock has been below its 50-day simple moving average at $31.25 since March 22. The stock has not yet tested its 200-day simple moving average at $27.73.

Analysts expect Bank of America to post earnings per share of 59 cents when it reports first quarter earnings before the open on Monday. When this bank reported fourth quarter results on Jan. 17 and beat earnings estimates, it included the positive effects of the Tax Cut and Jobs Act. For Monday's report, Zacks Equity Research expects Bank of America's investment banking income to be a drag on first quarter earnings. Zacks notes that the high volatility around the globe has likely slowed down the IPO market.

The stock closed Thursday at $30.65, up 3.8% year to date and 7.3% below its March 12 high of $33.05. The stock is 6.6% above its 2018 low of $28.75 set on April 2. (See also: Bank of America Shares Seen Rising 8% Short Term.)

The daily chart for Bank of America

Bank of America stock is above its 200-day simple moving average of $27.73 and below its 50-day simple moving average at $31.25. The stock is well above its semiannual and annual value levels of $25.71 and $20.93, respectively. Above the graph are monthly and quarterly risky levels of $33.30 and $33.97, respectively.

[Learn how to use simple moving averages to analyze stock charts in Chapter 2 of the Technical Analysis course on the Investopedia Academy]

The weekly chart for Bank of America

The weekly chart for Bank of America ended last week negative, with the stock below its five-week modified moving average of $30.64. The stock is well above its 200-week simple moving average at $19.49, which is also the "reversion to the mean," last tested during the week of Sept. 30, 2016, when the average was $15.12. The 12 x 3 x 3 weekly slow stochastic reading is projected to fall this week to 40.83, down from 46.42 on April 6.

Given these charts and analysis, I recommend buying Bank of America shares on weakness to my semiannual value level of $25.71 and reducing holdings on strength to my monthly and quarterly risky levels of $33.30 and $33.97, respectively. (For more, see: 7 High-Return Stocks to Survive Market's Chaos.)