Bank of America Overpriced For Many Reasons

Bank of America Overpriced For Many Reasons

The US dollar is the worst performing G10 currency this year, down 8% versus its major peers. But it’s still expensive relative to its history, according to Bank of America Merrill Lynch.

The currency remains overvalued by about 10 percent compared with its long-term equilibrium and about 12 percent above its 20-year average in real effective term.

The stock market is expensive by various measures of valuation. But that doesn’t mean a crash is imminent. The market  has support from various sources to keep rallying, including strong company earnings and a stable US economy.

Technical Analysis

Overall, the bias in prices is: Upwards.

Short term: Prices are stalling.

Intermediate term: Prices are ranging.

The projected upper bound is: 25.53.

The projected lower bound is: 23.45.

The projected closing price is: 24.49.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 22 white candles and 25 black candles for a net of 3 black candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 3 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 60.1381. This is not an overbought or oversold reading. The last signal was a sell 12 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 57.47. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 69 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 30. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 7 period(s) ago.

Rex Takasugi – TD Profile

BANK OF AMERICA closed up 0.570 at 24.480. Volume was 7% above average (neutral) and Bollinger Bands were 27% narrower than normal.

Open     High     Low       Close      Volume
24.270  24.665  24.250  24.480  18,648,148

Technical Outlook
Short Term:               Neutral
Intermediate Term: Bullish
Long Term:                Bullish

Moving Averages: 10-period     50-period     200-period
Close:                       24.13             23.60            22.40
Volatility:                22                  28                  29
Volume:                  15,188,735   16,345,063   19,845,344

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

BANK OF AMERICA gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
BANK OF AMERICA is currently 9.3% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of BAC.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on BAC.N and have had this outlook for the last 18 periods.

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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