Time to sell higher and buy deeper?
October 14, 2021, before the market opens, Bank of America Corp (BAC) is expected to release its earnings report for the third quarter of the year. The report will cover the fiscal Quarter ending September 2021. Let's see what Zacks Investment Research expected $0.71, up from $0.51 of the same quarter last year, and ranked it #3 (Hold)
If you are looking to see why the Bank stock was around 20-30 for such a long time, before jumping towards 45, you can check bellow chart to see its Year Over Year (YOY) EPS changes. BAC stock jumped after surprising the markets by more than 115% and 117% surprise annually. After four consecutive quarters of year-over-year (YOY) EPS declines, 2021 was surprisingly great for Bank of America in the first and second quarter and still can be positive as in the past months increasing real interest rates, and Bond Yields were positive for the financial sector.
In the last quarter on July 14th, 2021, Bank of America reported its second-quarter earnings including $1.03 EPS, more than the consensus estimate of $0.77. But revenue at $21.50 billion was down 3.6% compared to the same quarter last year.
For this quarter, while reopenings got faster, we have more businesses recover or reopened and even new started companies. These companies needed credits and low banking rates were the main encouragement for them to borrow more money from the banks, which can be the main driver in the credit sector to increase the bank's revenue in this part.
And the second reason is to be a more optimistic expected increase in the bank income from its trading desk. Investors are expecting to see more income for the bank from its equities, fixed income, currency, and commodities trading desks. Since the last quarter we saw great and bi movements in many stocks, it is expected to see more income from this sector.
From the technical point of view, in the Daily chart, we can see it in a clear uptrend with two strong supports, sitting at 50 and 200 Daily moving averages at $42.30 and $38.70 respectively. As long as the price moves above 200 DMA, bulls have to fill control of the market, while negative reports with overall weakness in the stock markets, can send the stock under 200 DMA as well. Breaching under $38 can open the doors for the next key levels ta 32 and 26 Respectively, which seems so unlikely at the moment.