Are BAC Shares Finally Ready to Reverse the Strong Downtrend?

Even since reaching a 52-week high of 19.86 back in April of 2010, Bank of America (BAC) shares have severely underperformed the broader market, falling by more than 30% in 8 months. The 50-day moving average has been a strong resistance for the stock (and provided great opportunity to short). However, today the stock broke above it 50-day moving average of 12.04. This will now be the new support. The stock also shows a double bottom at the 11-level. If BAC shares can breach the 13-level, the downtrend will also be reversing course.

Investors bullish on BAC can go long with stop-loss underneath the 50-day moving average. The February 2011 12.00 strike calls look attractive.

DevTrade (Full Disclosure: Author long BAC Calls at the time of writing)