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Bank Of America: Time To Sell?

May 08, 2018 11:18 AM ETBank of America Corporation (BAC)75 Comments
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Dividend Investors


  • 2018 has proven itself to be an already-chaotic year for the financial markets.
  • So far, the banking sector has emerged as a special star in an increasingly uncertain global growth environment.
  • But it may be time to sell Bank of America, as the stock is looks less impressive in that group and we have reduced position sizes in our BAC long.

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Already, 2018 has been a chaotic year and dividend investors are looking for ways to protect themselves from the next major shocks. At some stage, all of the uncertainty created by external trade discussions will need to show itself in quarterly earnings figures - and that has not happened within the banking sector. If anything, those uncertainties have made banks more attractive, as volatility in the financial markets has improved revenues for most of the major names in the industry. The position of Bank of America Corp. (NYSE:BAC) is looking less impressive within this group, however, and we believe the stock could continue to have trouble gaining in upside momentum. We have been signaling this for the last few weeks, and recent price moves have pushed us into a call for action. We have not flipped to an outright sell stance on the stock. In fact, we will continue to hold half of our trade initiated on the drop to $15. But we have reduced our position size in BAC to keep capital available for new portfolio allocations in the banking sector.

Chart: CNN Money

When compared to what has been seen in many other sections of the market, it can be said that BAC has treated us well. Massive bull runs in the stock have propelled BAC to gains of 81.87% over the last three years. More near-term, however, the picture is not as exciting. This year, BAC is higher by only 0.75% - even after strongly positive earnings releases have received a large amount of attention in the financial news media.

Chart: Federal Deposit Insurance Corp.

Of course, those earnings have been terrific - relative to expectations, at least. Several macro factors are working in combination to support the outlook for BAC and most of the other big banking names included

This article was written by

Dividend Investors profile picture
Finding deep value through high-yielding dividend investments.  In our analysis, we use fundamental valuation techniques that are combined with technical charting methods.  We establish both bullish and bearish stances on key assets in the market.  We look for undervalued stocks and missed opportunities as a means to identify inefficiencies in the system.  And then we capitalize on them.

Analyst’s Disclosure: I am/we are long BAC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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