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Maybe I’m blinded from love, but I decided to add Bank of America (BAC) to my 4 stocks to buy in 2010, after doing the same in 2009.
While the 8% return the stock saw last year was nice, I really thought the bank would have made further strides into 2010, so hopefully you can see why I decided to take another attempt with the stock this year.
While I expect Bank of America to be well into the 20′s by year end, I am well aware of the challenges and uncertainties that stand in its way. For one, Brian Moynihan will officially take over the CEO position, although he wasn’t their first choice.
Considering how many people turned down the position alone shows you what difficulties lie ahead. The dividend has been slashed down to just a penny and the company has continually made questionable decisions over the last year.
With so many problems, I’m sure you are wondering why I then still like this stock so much. Over the last decade, Bank of America has taken such a huge hit both in the public eye and through the financial statement. Call me crazy but I am betting on the fact that Moynihan and the board will somehow find a way to turn this beaten down company into a resemblance of what it used to be.
Remember that not too long ago this stock was into the 40′s, so getting into the mid-20′s by year end doesn’t look like too much of a big stretch.
Below is a Bank of America stock chart with 1 year time frame.
In the chart above I have drawn out two wedge patterns which both have similar setups and equal volume distribution. You can see a breakout to the positive side on the first wedge pattern led to a 5 point increase. A similar breakout on the second wedge pattern can lead to another similar jump in price.
Overall Bank of America will most likely be a volatile stock throughout 2010. Just look at 2009, the stock went from $15 to $3 to $18 and back down to $15. Continue to watch this stock and try to profit on the individual moves that you can.