Chart of the Day: Is Good News on the Horizon for Bank of America?

Bank of America Reports Solid Q4 Results: Here's How to Trade It

There's no question, the banks roll with the economy. Loan origination, mortgages, investment banking, financing for autos, interest margin and a host of other segments comprise the core for large banks such as Bank of America (BAC) . Lately, however, there's been talk of the economy slowing down significantly, perhaps even towards recession, and that is not good for the financials.

We often see investors get out in front of such situations by selling first, and perhaps that is what we have witnessed with BAC. The stock has been under pressure for weeks, falling some 15% over the last month or so.

The chart (see below) is clearly bearish, with a series of lower highs and lower lows. That is our textbook definition of a downtrend, and while it may appear the stock has stopped going down, we need a few more days to feel confident that the trend down has completed. The ADX is still rising so this does not give us this indication; MACD is oversold.

A bright spot? Perhaps it is the Chaikin money flow at the bottom of the chart, which is still making higher highs and higher lows and is comfortably in the positive. I'm not sure this is enough to stop the bleeding, however. Candles are purple and pink, which is bearish on the GoNoGo composite of indicators.

Potentially positive news comes out on banks this month or very soon. The Basel "Endgame" decision on capital/reserves might stoke a rally and bring more buyers to the fore, but the stock needs to do some heavy lifting.

We like Bank of America in TheStreet Pro Portfolio and rate it a One, or "buy at anytime."

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At the time of publication, TheStreet Pro Portfolio was long BAC.