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Bank of America Corp. Market Update

1/17/2023 3:40 PM

Quotes of stocks of Bank of America Corp. resumed growth from mid-December and by the end of last week reached the area of 35.20.

Prices are supported by two main factors – positive financial statements for Q4 2022 and the likelihood of a slowdown in the pace of monetary policy tightening by the US Fed. After the reduction of inflationary pressure in the US economy in December, investors are confident that the regulator will raise the interest rate by only 25.0 percentage points at the next meeting instead of 50.0 percentage points. Such actions by officials should reduce the risks of a serious economic downturn, which pushes up the stock market.

The financial data of Bank of America Corp., published last Friday, turned out to be better than experts' forecasts. Thus, earnings per share amounted to 0.85 dollars instead of the expected 0.77 dollars, and revenue reached 34.66B dollars instead of the projected 24.33B dollars. An increase in interest income due to higher interest rates and in the volume of lending contributed to the improvement of indicators. The bank's net interest income amounted to 14.7B dollars, which is slightly less than the estimated 14.8B dollars, but still 29.0% more than last year. Nevertheless, the management predicts a deterioration of the situation in the near future. In particular, the CEO Brian Moynihan said that the bank is preparing for a potential moderate recession this year. Interest income in Q1 may decrease significantly, and the volume of outstanding loans may increase.

Technically, the price has broken above the reversal level of 34.38 (Murray level [6/8]) and may continue to move towards 37.50 (Murray level [8/8]) and 38.60 (the area of November highs). The key for the "bears" is the average line of Bollinger Bands in the area of 33.20, consolidation below it will give the prospect of a price return to the level of 31.25 (Murray level [4/8]), however, this option of price movement still looks less likely, since technical indicators confirm the continuation of an upward trend in the market: the Bollinger Bands and the Stochastic are reversing upwards, and the MACD histogram is increasing in the positive zone.

Resistance levels: 37.50, 38.60. | Support levels: 33.20, 31.25, 29.69.

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