close icon

Bank of America and the So-Called Trump Rally

Bank of America stock proves that you cannot rely on politics for your investments

Our previous article on the subject, titled “Bank of America: A Good Long-Term Bet?” was published on August 24th, 2016. Two and a half months before Donald Trump’s election for president, while the stock was trading near $15.30, the Elliott Wave Principle was already preparing us for a major rally in BAC. Now, everyone calls it “the Trump rally” and financial stocks have been among the biggest beneficiaries. Bank of America, in particular, rose from $17 to as high as $25.80 between election day and March 2nd, 2017.

Recommended reading: BAC: A Good Long-Term Bet?

However, shares tumbled to $22.45 yesterday. According to mainstream media, it is because the Trump rally was “waning“. OK, fine. It looks like everything could be explained with Trump, if you really want to. But since you already saw that Bank of America was going to rise with or without Trump, let’s see what we should expect from now. The next chart allows us to examine the Trump rally through an Elliott Wave perspective.
bank of america trump rally 23 march 2017
It seems the rally Trump is so proud of, was nothing more than a natural third wave within a five-wave impulse. That third wave, labeled as (iii), ended at $25.80, so the current pullback is supposed to be wave (iv). The bears would probably test the lower line of the price channel, before the bulls return and lift Bank of America again in wave (v) of 1 of (3). When this happens we are likely going to hear that the Trump rally has resumed. Unfortunately, if this is the correct count, it would cool off again very soon, since every impulse is followed by a three-wave correction in the opposite direction. In this case, a retracement in wave 2 should follow, before Bank of America’s uptrend could really continue in wave 3 of (3).

In conclusion:

  • Bank of America was supposed to jump anyway
  • The current drop is not Trump’s fault, either.
  • BAC is still in a long-term uptrend

So, if you want to continue having no idea what is happening in the stock market, watch what Trump is doing. If not, give the Elliott Wave principle a chance.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Rapid7 Doubles As Elliott Wave Setup Bears Fruit

We first wrote about Rapid7 in late-August 2019. The stock was hovering above $55.50, but the structure of the post-2016 uptrend suggested a notable decline was in progress. In March 2020, it fell to $31.34, down 52.5% from its all-time high. A month later, with RPD still below $47, we shared our bullish stance on…

Read More »

PNC Financial – Elliott Wave Analysis Works Yet Again

Earnings at PNC Financial suffered last year along with the entire financial sector. Net income before extraordinary items came in at $2.95B in 2020, down from $5.35 in 2019 for a 45% reduction. In our opinion, amid the biggest crisis since the Great Depression, the fact that PNC and its peers even managed to stay…

Read More »

Betting on 3i Stock a Year Ago Pays Off in Spades

The first time we wrote about 3i Group was in late-October 2019. The stock was hovering around 1100 pence a share following a 1000% gain in the past ten years. Needless to say, few thought a major decline was even possible. Fortunately, Elliott Wave analysis helped us see the bulls cannot be trusted. Five months…

Read More »

Ahead of Hibbett ‘s Unlikely Surge to New Records

Hibbett Sports Inc. is an American sporting goods retailer with more than 1000 stores in over 30 states. We first wrote about the company in the summer of 2017. The stock was trading below $16 a share back then, following a decline from as high as $68.31 in late-2013. At first glance Hibbett looked like…

Read More »

Walgreens Stock Confirms Downtrend is Over

Walgreens stock had been declining for over five years between 2015 and 2020. One of the largest pharmaceutical retailers in the world reached an all-time high of $97.30 in August 2015. In late-October 2020, it fell to $33.36, losing almost 66% from the record. It must have been difficult for Walgreens investors to keep a…

Read More »

Interpublic on the Verge of Doubling Amid Pandemic

We first wrote about Interpublic in March 2018. The stock had just reached $26 a share, but we thought an Elliott Wave correction can “easily erase about 50% of Interpublic ’s market capitalization.” Two years later, during the coronavirus panic in March 2020, IPG fell to $11.63, down 55% from the 2018 high. Fortunately, the…

Read More »

Expedia Acts As If Travel Restrictions Do Not Exist

We last wrote about Expedia in mid-2020. Countries around the globe had mostly closed their borders, the COVID-19 vaccine was still just a hopeful prospect and the summer travel season was practically ruined. No wonder the stock of Expedia, one of the largest travel booking companies, was down 46% from its 2017 high. Yet, during…

Read More »

More analyses