Is the Market Wrong on Bank of America? Here's What the Charts Say

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During Thursday’s Mad Money program Jim Cramer told viewers about the earnings from Bank of America (BAC) and Citigroup (C) , both of which saw their shares fall on the news.

Cramer said the market is wrong on Bank of America, which delivered a top- and bottom- line beat.

Let’s check out the charts.

In the daily bar chart of BAC, below, we can see a mixed picture. Prices are in an uptrend above the rising 50-day moving average line. The 200-day moving average line is positive and intersects down in the $29 area.

The On-Balance-Volume (OBV) line shows a positive trend the past 12 months but has not kept up with the price gains in the past two and a half months. The Moving Average Convergence Divergence (MACD) oscillator shows weakness from March to April and that is a bearish divergence when compared to the price movement.

In the weekly Japanese candlestick chart of BAC, below, we see some clues worth pointing out. Prices have doubled from their March 2020 lows. BAC is trading above the rising 40-week moving average line but the three recent candle bars suggest a top reversal is at hand.

The OBV line shows a small turn lower and the MACD oscillator has begun to narrow, which means that the trend strength is weakening.

In this daily Point and Figure chart of BAC, below, we can see a potential upside price target of $50. A trade at $37.85 could begin to weaken this chart.

Bottom-line strategy: BAC is pointed up with a possible $50 price target but the trend looks like it is fading a bit. I am in no rush to recommend the long side of BAC just yet.