We originally initiated our position in BAC on Dec 09, 2010 when it broke out of the 50-day moving average (after a long downtrend). We were right! The stock then ran up more than 25% up to its earnings release. On Jan 20, 2011 we mentioned in our post that, given the run up in the share price, it would be prudent to book some profit (and suggested a stock replacement strategy). We were right again! The stock has pulled back quite a bit since the earnings release.
The recent price action in the share price tells us that it might be the time to get long BAC shares again! Over the last couple of trading days, BAC shares have been able to hold the 13.50 level (please refer to the attached chart).
Investors bullish on BAC can go long. However, if it breaks the 13.50 level, it can easily test the 50-day MA which is at 13.05. So a stop-loss underneath 13.30 or 13.00 would be prudent.
DevTrade (Full Disclosure: Author long BAC Calls at the time of writing)
Excellent post. I was actually going to write you something just about this! Glad I was finally on the same page as you (even though you beat me to it, grrr). ^_^
Will be letting you know which call I take. It’ll be in the money stock replacement.