Bank of America Corporation (BAC) is a Charlotte based banking and financial services provider that works with a spectral variety of end-customers ranging from retail bank users to corporations and institutional investors. As of this post (1:00PM CST) BAC is currently trading at 15.85, down 3.86% on the day. BAC is down with the broader market on the session, assisted by an earnings miss from JPMorgan Chase (JPM) and an in-line report from Wells Fargo (WFC) that was still met with a bearish reaction in early trading. BAC is trading near the middle of its 52 week range of 14.37-18.21, and the company is set to report earnings tomorrow, 1/15/2015 before the opening bell.
Over the last eight quarters of earnings data available, BAC has traded mostly bearishly, moving lower on five out of eight sessions immediately following the EPS release. The average historical move during this same time period has been 3.0%. Currently the options market is pricing in approximately a 3.44% move, relatively in-line with historical expectations. This implied move would represent about a 0.55 change in the price of the underlying stock by this Friday’s monthly options expiration in the January contracts. BAC stock opened this morning with a significant gap lower and is now well below the Ichimoku cloud on the daily chart after hitting firm resistance near the 18.00 level in late December. In conjunction with JPMorgan’s earnings miss and the bearish reaction to Wells Fargo’s in-line report, I am certainly leaning bearish BAC going into tomorrow’s earnings announcement. I am looking to establish a short position in this name heading into today’s close.