Warren Buffet 2nd Darling..Bank of America
Given that Buffett's favorite industry to invest in is banking, perhaps it comes as little surprise that he's been piling into Bank of America (NYSE:BAC) in recent weeks.
After obtaining permission in April from the Federal Reserve Bank of Richmond to increase Berkshire's ownership stake in BofA past the usual 10% limit for investment companies, Buffett has taken advantage by building Berkshire's stake to nearly 12% of the bank's outstanding shares. In total, approximately $2.1 billion has been invested in BofA stock within the past couple of weeks.
Why Bank of America? The simple answer is that it's a money machine and has cleaned up its act. We're more than a decade past the trough of the financial crisis, and BofA has put mortgage settlements and the awful credit quality of its loan portfolio to bed. Today, it is well capitalized and has been returning boatloads of capital to shareholders during periods of strong economic expansion. Had COVID-19 not gotten in the way, Bank of America was set to return $37 billion in cash plus buybacks to its shareholders between July 2019 and June 2020.
The bank also deserves credit for reining in costs by focusing on digital banking and mobile apps. With more of the company's customers conducting their business online, fewer physical branches have been needed, which has helped to reduce noninterest expenses.
But what might intrigue Buffett the most is BofA's interest sensitivity. It's arguably the most interest-sensitive money-center bank on Wall Street, and rates have nowhere to go but up over the long run. When the Federal Reserve does begin raising rates in (presumably) 2023, Bank of America should be the biggest beneficiary.
NCB trade ideas
BAC (Bank of America Corp) - sell on slight bounce BAC (Bank of America Corp) is in complex correction as WXY, where Y is in progress. A impulse of Y down has finished and B up correction is on. So wait for B to finish near 26.05- 26.61 zone. Sell within that zone with stops above 27.76 for target below 22 or lower as C of Y wave.
BAC DAily/Hourly demand zone 25.55 - 25.2 BAC DAily/Hourly demand zone 25.55 - 25.2
cmp:25.95 17 aug 2020 price quite near to demand zone, after making few exciting drop in hourly candles
pro:
1. 2 exciting candles legout
2. origin of upmove in hourly candles
3. good single exciting candle legout in daily location time frame
4. BAC is in trend till it hit next weekly supply
Con:
1.Approaching and near weekly supply
2. hourly candles lots of base in left of the zone, so zone might not work
3. SPY is near previous all time high, so if it correct. this level may not hold
BAC : Bouncing off or collapse ?Hello Everyone! Watch the closing of BAC today as price came closer to its 20 sma and looks like ready to bounce off heading north.
Where north ? if that will be the case 27,50 is next target, than 29,00.
If trend will remain bullish we are going to get confirmation from XLF as well, very close to its 20 sma the index looks like the photocopy of BAC, than if BAC will go up, XLF will do the same and vice versa. The things are connected.
What about a collapse scenario ? Well, we have few supports quite close as well: 32.8% Fibo level (24,85 usd) and 50% (23,55 usd), I expect in the worst case scenario these levels will hold the price.
Take it in two steps : check first closing of today, holding the 20 sma is the first step for the bullish case, and wait for a confirmation candle tomorrow, and....may the market be with us!
Bank of America, possible long positionAfter spending some time watching the chart there are some things that I would like to highlight:
First of all the last candle stays in a crucial zone which is a resistance line. Besides, this candle is above the moving average (150) which could be a long signal and if we follow the analysis the fibonacci retracement lines (150) show us that the current price is below the 0.5 line.
I think that all of this could result in a long position.
I've also seen the fundamentals showing a "normal" P/E ratio and a PEG below the median of the banking industry (1.80 vs 2.20 approximately). Apart from this the stock has a price to book below one which could mean that the stock is quite undervalued.
So, that's my recommendation, hope you like it! Every comment or suggestion is always welcome.
Big players betting on BACThe biggest fish in the tank is betting on Bank of America right now. We know that he is a fundamental based player, but take a closer look at the chart.
The direction is in our favor.
Indicators are up-trending, but RSI is almost overbought, that is why I think we will have a small pullback before the break-out.
I hope this analysis was helpful :)
Plays it smart!