Charts signal bears in charge when it comes to big-bank stocks: analyst

Bank of America shares were on track for a weekly gain, but were off 1.3% in Friday’s session to trade near $28.10 in afternoon trade.

The quarterly price chart below, shared by Basa, shows important support for Bank of America shares at the $23.33 level. It’s derived by taking the rate of decline from Q4 2022 and Q1 2023 and projecting that forward into the current quarter, Basa said. Falling below $23.33 in the second quarter would mark an acceleration of the long-term downtrend.

The yearly and monthly charts below also reflect building downside momentum.

The market is already below its yearly breakdown at $29 from the March selloff, he said.

If Bank of America sustains a move below the $27.30/$27.40 breakdown, the minimum projection is for another roughly 15% fall to the $23.30 level, which then points to a potential 25% decline to joint May and yearly support at $20.70/$20.40, he said.

What about this week’s bounce? As long as the weekly trend remains down and bearish below $28.20, the shares appear poised to march lower, he said.

A Friday close above that level, however, would turn the weekly trend neutral and offer a signal that market may be attempting to set a low off the $27.40 to $27.30 zone, he said.

Regardless, the long-term price charts signal that the shorts — traders betting on a fall in prices — are in charge, and that longs are likely to sell on bounces, Basa told MarketWatch.