Is Bank of America a buy or sell in February?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Feb 6, 2021
  • Bank of America shares advanced last week more than 9%
  • Congress will sallow Biden's $1.9T stimulus plan to pass without Republican votes
  • Bank of America continues to improve its market position

Bank of America (NYSE: BAC) shares advanced last week more than 9% as the prospect of another large fiscal stimulus bill improves. Bank of America reported Q4 results in January that showed signs of recovery and announced that it expects a successful 2021.

Fundamental analysis: Bank of America continues to improve its market position

Expectations of the further stimulus lifted the US stock market last week despite a disappointing US Nonfarm payroll report. According to the latest news, Congress will sallow Biden’s $1.9T stimulus plan to pass without Republican votes.

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Bank of America shares are trading again above $32, and the technical picture implies that the price could advance even more this February. The US treasury yield rose two basis points last week to 1.10%, which indicates that investors are more confident about economic prospects.

Bank of America reported Q4 results in January; total revenue has decreased by -10.1% Y/Y to $20.1B while Q4 GAAP EPS was $0.59 (beats by $0.05). This bank has proven its stability during the Covid-19 pandemic, and its Q4 report showed signs of recovery, led by increased consumer spending, stabilizing loan demand, and strong investing activity.

“In the fourth quarter, we saw higher net interest income, higher Consumer revenue, record asset management fees, strong results from our Global Markets teams, and a stronger balance sheet. In 2020, we earned nearly $18 billion and achieved several key strategic objectives: gaining market share in deposits, expanding our digital leadership, and adding thousands of wealth management clients, “said Chairman and CEO Brian Moynihan.

Bank of America expects a successful 2021, and as more people get vaccinated, economic activities will start to recover, which is driving investor sentiment. Bank of America has a strong balance sheet, its dividend remains safe, and this bank continues to improve its market position.

Technical analysis: $35 represents a strong resistance level

Data source: tradingview.com

Bank of America shares have advanced from $29.7 above $34 since the beginning of January, and the current price stands around $32. The critical support levels are $30 and $27.5; $35 and $40 represent the important resistance levels.

If the price jumps above $35, it would be a signal to buy Bank of America shares, and the next target could be around $40, but if the price falls below the $27.5 support level, it would be a firm “sell” signal.

Summary

Bank of America shares advanced last week as expectations of the further stimulus lifted the US stock market. The US treasury yield rose two basis points to 1.10%, which indicates that investors are more confident about economic prospects. Bank of America reported Q4 results in January that showed signs of recovery, led by increased consumer spending, stabilizing loan demand, and strong investing activity.

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