Bank of America (BAC) moved above the closely watch resistance at 10 and drove higher. Now consolidating at 10.50 in a bull flag it has a Relative Strength Index RSI that is bullish and running flat along the technically overbought level with a Moving Average Convergence Divergence indicator (MACD) that is positive, but might be stalling.
The current level is also the Measured Move target from the September-October ascending triangle break. If it can break the flag higher there is a Measured Move higher to 11.20. Be careful as the Open Interest (OI) in the December Options shows the maximum at the 10 Strike Call and 9 Strike Put, making the maximum options pain level below 10. From a longer view the 3-box reversal Point and Figure chart (PnF) carries a price objective much higher at 20.
Trade Idea 1: Buy the stock on a move over 10.60 with a stop at 10.47.
Trade Idea 2: Buy the December 10.50 Calls (offered late Friday at 21 cents) on the same trigger.
Trade Idea 3: Buy the January 4 Expiry, 10.50 Strike Calls (34 cents) on the same trigger.
Trade Idea 4: Buy the December28/February 11 Call Calendars (28 cents) and continue to sell weekly 11 Strike Calls if the price does not rise.
Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Original post