Is Bank of America Corporation (BAC) overbought?

The Bank of America Corporation (NYSE:BAC) is trading at $33.80 ahead of the earnings release in a week. The price is at par with the same period last year, considering a 1-year loss of 0.29%.

An assessment of BAC in the previous six months shows the rate of return at 19.43%. Comparably, the returns in the past one month are 10.17%. Conversely, the stock has remained bullish since November. Can BAC keep up the bullish momentum in 2024?

Bank of America will announce returns within a week. Earnings are expected at an EPS of $3.43. That brings the forward PE ratio to 10. Considering a dividend yield above 2.84, the fundamentals are strong. The strong fundamentals explain why BAC accounts for 9.8% of Berkshire Hathaway’s portfolio. Interested investors should, however, analyse the price movements for the right entry point.

Bank of America is trading in the overbought region

A technical analysis of the price chart shows that BAC is on a bullish trend. However, resistance should be expected at $36. The price may decline after the earnings date, consistent with the trend over the same period last year.

An assessment of the daily RSI chart shows the 14-day average at 73. The current RSI level is 68.16. BAC is, therefore, trading in the overbought region.

We expect Bank of America stock to gain in anticipation of the earnings. After the earnings date, the price is likely to pull back. Bears could target the price at a crucial support at $27.

While the price pullback is inevitable, it is unlikely to go below $27. The pattern would create more favourable entry positions for new long-term investors. Existing investors should consider buying Bank of America for long-term gains and dividends.

Should you buy BAC this week?

Bank of America is trading in the overbought region. However, the stock may gain slightly to the resistance level of $36 ahead of the earnings date. 

After the earnings release, the stock could trend downwards, creating more favourable entry points. Investing in the stock after a pullback is more recommended.