Banking On Banks
While tech remains tentative, there are some old-economy areas that are
setting up well of late. The banking sector has quietly continued to bounce back
from its March 22 lows, and Bank of America
(
BAC |
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PowerRating) in particular is setting
up in an interesting pattern.
As the chart below shows, BofA had been building a 10-week base and broke out
above it last Thursday to close at its highest level since September 2000. BofA
has spent the last three sessions gradually pulling back, but as you will
notice, its volume has been drying up.
I will be watching Bank of America to see if it can challenge
last week’s highs and do so on increased volume. If it can break above that level,
it will likely encounter resistance at it September 2000 high of 57.62. Today’s
weaker-than-expected consumer confidence numbers suggest that the Fed may have
more rate cuts ahead, so keep in mind that the banks will be among the
beneficiaries of lower rates.
Until Wednesday.