Bank of America's $5.00 Stock Chart Challenge (BAC)

Bank of America Corporation (NYSE: BAC) has not done well with a good market nor with a bad market.  The big gap-up Monday was sold off and now the lows on Tuesday have violated the lows of Friday.

Shares are down 3.6% at $5.07, and the new 52-week low (hit today) gives a new 52-week range of $5.03 to $15.31.  Thomson Reuters still lists $9.76 as the consensus price target.  We would note that this is such a high number that it just has not been ratcheted down further.

Warren Buffett invested heavily in Bank of America over the summer.  Now the big question is whether or not Bank of America’s stock can stay above $5.00.  If the $5.00 barrier is breached, the fear is that some mutual funds will not be able to hold the stock any longer.  Some investors may also not be able to buy BofA shares on margin either.  Those are two big fears that used to be far more prevalent but are still considered by some investors.

A 2% drop from here puts BofA’s stock back under $5.00, and the last time the stock was down that low was during the peak of the crush-depth selling during early 2009 at the peak of the market panic.  The new stress tests and reported indications that regulators want BofA shoring up more capital and possibly even coming up with a break-up plan are not helping the stock out.

The stock chart from stockcharts.com pretty much says it all…

JON C. OGG