Bank of America reported its Q3 results on Monday. To say that the mega bank’s performance was good would be an understatement. Record net income of $7.2 billion translated into EPS of $0.66, 11% return on equity and 1.23% return on assets. The latter is a pretty solid result for a bank with $2.34 trillion in assets.
Unfortunately for Bank of America shareholders, the company’s stellar business performance failed to lift the stock price. In fact, BAC fell to $27.64 per share shortly after the Q3 report was made public. Given that we have been bullish for quite a while now, it’s worth hearing what the Elliott Wave Principle has to say now.
The 2-hour chart of bank of America stock reveals the structure of the entire decline from $33.05 in March. It looks like a simple A-B-C zigzag correction is in progress. The truth is the stock’s slide could have ended much earlier, but the market decided to draw an expanding triangle in the position of wave B.
Instead of ending at $27.63 in July as suggested in our previous update, wave C is still unfolding. It should eventually evolve into a complete five-wave impulse, meaning lower levels can be expected, before the bulls return. A series of fourth and fifth waves in wave C should first develop.
Bank of America’s future remains bright as business performance is what matters in the long-term. In the short run, however, BAC may slide to $26 – $25 a share, before the situation starts to improve.
Did you like this analysis? Our Elliott Wave Video Course can teach you how to uncover similar opportunities yourself!
Disclosure: The author holds a long position in Bank of America stock.