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Justin M. Hall
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Justin Hall is an extremely accomplished independent financial analyst with more than a decade of experience in the financial markets. He consistently provides expertise to a variety of financial clients and is known for his successful market predictions. Between 2010 and 2014 Justin made 239... More
  • Game Plan For Bank Of America: Stay The Course 2 comments
    Mar 5, 2012 6:56 PM | about stocks: BAC
    2/8/12 | 7:09 AM ET

    Bank of America (NYSE:BAC)
    As BAC nears the $8 mark, shorts have predictably shifted into overdrive. They're wasting both time and energy.

    Note to my friends who like to play on the short side of the trade: I anticipate that we will see a bifurcated market sooner than later. Rather than shorting the financials, a 2012 leader, take a look at biotech and consumer staples. Look for defensive stocks to come out of favor in Q2 2012.

    In my view, BAC has very limited downside right now.

    Here's how I see things playing out in the coming days and weeks:

    #1 I anticipate BAC will break above $8, possibly this week. Near-term, look for shares to retest that Buffet high back in September: $8.50-ish

    #2 In the back half of February, BAC will likely pullback 10% to 15%, briefly touching down at or near $7.50-ish.

    #3 Post pullback, BAC should rebound and hit resistance just shy of that Buffet high, at or near $8.50. Here, I expect shares will consolidate. Trading is likely to appear indecisive. Under this scenario, we're likely to see: (1) uncommitted investors exit stage left AND (2) shorts misinterpret investor indecision as weakness and overplay their hands - yet again.

    #4 At some point in March, BAC will shake both weak hands and shorts and head north prior to the Q1 2012 results in April. Just before the report, I am looking for shares to potentially settle at or near the $10.30 area.

    Last I checked, analysts were estimating that BAC would report $0.12 EPS in Q1 2012. As I recall, the company reported $0.17 during Q1 2011. At this time, I'd say the odds seem to favor a BAC beat.

    With decent Q1 results, I believe BAC could reach as high as $12+ in April-May 2012.

    Can I guarantee anything above? Heck no! I presume that adult investors understand the risks and believe they'll exercise good judgment.

    If you don't like the common stock, consider BAC near-the-money MAY 2012 and JANUARY 2013 calls. Others are playing BAC's preferred shares and warrants. Do what you are most comfortable with doing.

    Over the long haul, I believe that BAC will prove to be a solid investment.

    Stay tuned.

    Bottoming Process

    Disclosure: I am long BAC.

    Themes: Finanacials, Banks Stocks: BAC
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Comments (2)
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  • Justin M. Hall
    , contributor
    Comments (753) | Send Message
    Author’s reply » 2/8/12 | 8:12 AM ET |


    CONTEXT: Please be sure to review my two most recent articles (both on BAC) published here at SA on 1/10/12 and 1/19/12.



    Feel free to post a comment or question below.


    8 Feb 2012, 08:15 AM Reply Like
  • Thankful Trader
    , contributor
    Comments (4) | Send Message
    Looking forward to seeing how the future unfolds for BAC. Thanks for posting. Keep 'em coming.
    8 Feb 2012, 11:35 AM Reply Like
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