Today’s S&P 500 Index re-weighting due to a larger float of Bank of America helped pull the bank’s stock higher throughout the trading day despite the overall stock market giving back much of the post-employment data gains early this morning. We were told that some 100 million shares needed to be purchased by S&P 500 Index-tracking funds alone, although we would note that usually not all index-tracking funds have to make the purchases on the same day any longer. Frankly, 1 billion shares for a very pow priced stock is nothing.
The last time Bank of America saw 1 billion shares trade hands was in May when the stock was at $11.47, and then on April 9 when the stock was at $9.53. Even on the dog days of March we saw far lower volume.
Citigroup Inc. (NYSE: C) has also seen 1 billion shares traded in a day, but it is less than $5.00 per share. That 1 billion share mark was hit for four consecutive days in September.
As we told our free newsletter subscribers this morning, Bank of America’s 50-day moving average has been acting as a severe overhang in the stock for most of the last month along with many key banking stocks. Again, the stock did not manage to stay above that level today. The simple 50-day moving average is $16.27 today, and the stock closed at $16.20. It did put in an intra-day high of $16.40 today and an intra-day high of $16.74. It will be interesting to see if that level holds or fails next week.
JON C. OGG
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