Some Technical Analysis Background on BAC:

As of this writing, at this minute, the share price of Bank of America Corporation remains at $13.17

The share prices of Bank of America Corporation (Public, NYSE: BAC) had been dropping since the high of $19.864 on April 15. If you pull up the charts, since the April crisis where the high volatility has started, its shares hasn’t stabilized, until today. The share price has risen slightly today, after 3 days of tight trading range. It has also formed a very nice Christmas Tree since Feb 2010 this year.

Fundamentals:
And if you ask for the reasons, partly was the crisis in April brought in by BP, Earnings Season of Q2 losing out to Q1, and the Euros Crisis. What’s worst was the Q3 Earnings for Bank of America, which was weaker than expected, compared to Q1 and Q2. This casued the price to drop, gaped down, after rallying in speculation.

And now for my analysis, both on TA, FA, and QA on the predicted movements of BAC.

The share price for BAC has dropped quite alot, breaking through the support @ $14 year end 2009. Too many Shorts perhaps, no one wants to take a big part of it. I think it will stay around the range of $12- $14+. As long as the economy and the Fed doesn’t improve and increase the rates, its shares will hardly be moved.

To quantitatively hedge against this drop, I suggest shorting BAC shares to a minimum of $12 (that’s just $1), and Long any Financial Index ETF (Will cover this set of leverage instruments in my upcoming posts) I will suggest a 80% short while 100% Long, so the risk beta is lowered. But that’s just my view, use at your own risk!

Finally, I would stay put, and wait for further information before betting my stake at it.

Disclaimer: I do not own any BAC shares, but I am looking forward to own one.

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As of July 12, Citigroup’s share price has almost broken out of its trading range of $3.70 and $4.10, gearing up for a breakout of share price. This has 2 implications.

1) The volume of block selling of Fed’s Citigroup shares were lesser than buying volume, resulting the share price to inch higher. There weren’t any unusual increase of volume traded suggesting that there aren’t much market movements. Thus it may not be a good sign, since the brokers may resume or increase the liquidation volume once again.

2) Based on EMH Efficient Market Hypothesis, the price we see today had priced in market risk, involving entire market’s movement, the release of Q3 company P&L results, as well as the possible good news in the Finance sector. This will definitely push prices up higher as demand increase for Citigroup.

So what are the signs we can expect to see ? Based on these 2 analysis, I am predicting the general 2-6 weeks price movements.

1) If the volume increases, even before or after the release of earning seasons, there might be a chance of Citigroup share price hitting 5-10% higher than what it is at $4 range. That will be about $4.20 to $4.40, keeping in mind the ongoing block sale.

2) Given the good market and strong Profits for Citigroup, we may see a surge of share price, followed by some cool down period, once again reaching the range of $4.20 and $4.40

Thus it may be a good time to already own some small positions, though I am not suggesting you to bet on it at such a mid-high price, depending on your risk level.

Disclaimer: The author have positions in Citigroup (Public, NYSE:C).