BAC Bank of America Daily Chart Positive Divergence

BAC releases earnings tomorrow. The daily chart shows positive divergence in place now across all indicators although the RSI will turn uncooperative since it is flat for the last month. The MACD histogram, stochastics and money flow, however, will remain positively diverged for any moderately lower price which forecasts a bounce coming.

Backtracking, the blue W pattern breakout was text book, the W formed under both the 50 and 200 MA's ensuring a double price move at least, so the 11 to 13 W pattern forecasted a 15 target and price did not disappoint. BAC behaves well technically, responding to positive divergence in December, and then receiving the spank down from negative divergence in January.

Back to the near term 6 week time frame, the red lines show a falling wedge and along with the current positive divergence will give BAC a little bounce in the near term; it is simply a matter of identifying the entry. 13 is a critical level since the W pattern broke out there. Over the last two years, BAC has moved between 11 and 19; dead money. Further, the MA's continue sideways with a downward bias and the 20 day MA is below the 50 day MA which is bearish.

Earnings should be in line, a repeat of the JPM scenario a couple days ago. There is no reason to short this stock. The potential play would be to let price leak lower to 13, and slightly under, check out the 12.8-ish area for an entry for a quickie long bounce play. Other than that, BAC will continue along sideways with a slight downward bias as the year moves along. There is no compelling reason to be long this stock over the coming weeks and months, except for the coming positive divergence bounce which should make some quick money from a 12.7-13.0 launch zone. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.