The Big Move: Financials Are Positioned for Significant Advance

Jan. 09, 2012 12:19 AM ETBAC, ETFC, IBN, IYF, XLF, SPPI, BRK.B, WFC, KBWB, IYG, RKH, BSCG, KBE, BSCF, UYG, FTCS, ILCB, IXG, IWX, MGV, SPYV, IVE, RALS, CVY, SPHB, VTV, PRF, NY, IWD, IUSV, OEF, XLG, CSM, RYJ, IWL, MGC, DGT, PMA, SPY, VOO, IVV, UVG, SPLG, EUSA, VV, PBP, IWB, SPTM, VTI, ITOT, IYY, RSU, IWV, FAS, RPV, DIA, NYC-OLD, SSO, EPS, TOK, E3 Comments
Justin M. Hall profile picture
Justin M. Hall's Blog
1.18K Followers
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Independent Financial Analyst, Private Fund Manager, Expert Advisor, Capital Gains!

Contributor Since 2009

Justin M. 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 specific market recommendations via his online subscription service with an 80% accuracy rate. He has produced enduring results for a variety of clients including those who trade stocks, invest their own money, desire personal wealth management, and institutional investors. But more than an analyst, Justin is a person who influences and persuades, whose judgement is well respected and highly trusted, and whose opinion is sought by those searching for financial and investment advice. Justin received his undergraduate degree from Indiana State University and attended law school at Indiana University. His desire to serve the financial and investment needs of individual clients led him to start Rx Investors.com, an online subscription service that connected individual investors with his expert analysis. Subscribers from all over the world utilized Justin’s advice to generate market income and grow their individual portfolios. Many of these subscribers and clients continued to seek Justin’s analysis and advice for many years, appreciating his unique perspective on the financial industry. A variety of financial outlets have recognized Justin’s expertise and highlighted his work including the Orange County Business Journal, Seeking Alpha, and Zack’s Investment Research. These industry connections have allowed Justin to lend his expert advice to others and expand his influence.
1/9/12


A Bold Bet on Bank of America (BAC)
Over the past three months or so, I’ve been building upon a longer-term position in BAC – allegedly the most hated bank in America. 

For US banks, expectations are low and shares remain dirt cheap compared to many of their foreign peers. The big Canadian banks, for example are trading at/near 3 X their book value.  Of the US lot, BAC has taken the worst beating, but I don't need to tell you that.  Right now, BAC is trading at/near 0.28 X its book and 0.77 cash values.
 
A Shift in Sentiment?
On Friday, 1/6/12, BAC appears to have formed a bullish pennant pattern. I expect that we will get confirmation sometime this week, 1/9/12 to 1/13/12.


RECOMMENDATIONS
I recommend that investors buy either (1) shares of BAC common stock at/near $6 OR (2) near-the-money January 2013 calls.  Whether investors elect to play shares or calls, use $15 as an exit target.

PRICE TARGET RANGE
My 1/18/13 price target range for BAC is set at $15–$20.
 
CATALYST
Going forward, I believe BAC is potentially setting up for a big move in the coming days and weeks. 

On Friday, 1/13/12, JP Morgan (JPM) will lead off the big banks Q4 2011 results. I believe the JPM report might have an impact on BAC shares.   Given that BAC is already setting up very nicely (reference the chart above), the JPM results are likely to have a positive impact on BAC as well as some of the other big banks.  Let's see how it plays out.

On Thursday, 1/19/12, BAC is scheduled to report Q4 2011 results before the open.  Between now and then, I think shares are likely to advance higher. IF the company provides some sort of positive guidance - sufficient enough to just exceed the already very low expectations, then look out - we might just see that big move, supra.

Note:  Based on my current projections, I anticipate that shares could potentially trade at/near the $12 mark by May 2012.

Do I recommend that investors run out and buy up a bunch of near-term BAC calls? No! 

You’ve gotta be patient and play it smart.  If BAC gets a near-term boost, great.  If, however, there's an underwhelming response to next Thursday's report, the longer-term positions recommended, supra, will give investors ample time for things to improve over the course of the year.  And I firmly believe that the circumstances surrounding BAC will significantly improve in 2012.

CONCLUSION
Between now and 1/18/13, I am confident BAC will prove to be a solid investment.  And that, you may hang your hat.

70 ETFs HOLDING BAC

OTHER PREFERRED FINANCIAL PLAYS
 

E*Trade (ETFC)

Broker
I prefer ETFC’s January 2013 $10 calls.   My 1/18/13 target for ETFC is set at $15.

ICICI Bank (IBN)
Emerging Markets
Like BAC and ETFC, I prefer the January 2013 $30 calls. My 1/18/13 target for IBN is $40+.

iShares Dow Jones US Financial Sector (IYF)
Diversified ETF
Avoid the IYF options and stick to the shares / units.

Financial Select Sector SPDR (XLF)
Diversified ETF
Again, I would avoid the XLF options and just play the shares / units.

SEE ALSO
 

Recommended For You

Comments (3)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.