A Trendy Stock Charts member requested last week that I take another look at some bank stocks. The member also requested that I pick my favorite bank stock of the group.
At first, I was not aware of the monumental task I created for myself. I figured that the pool of bank stocks for my favorite bank stock selection would include all banks I have written about in the last year. Those banks include Bank of America (BAC), Citigroup (C), the Financial Select Sector SPDR ETF (XLF), Goldman Sachs Group (GS), JP Morgan Chase (JPM) and US Bancorp (USB).
While there are a couple of new stocks to look at for long-term trends, I also provided my long-term outlook for a couple of the stocks in this previous update:
Not all the above stocks were reviewed in that update though. I will re-analyze those 3 stocks in the long-term trend review as well to see if any revisions to their analysis are necessary.
In order to pick my favorite bank stock, I will need to look at some long-term charts. The charts of choice will be 5, 10 & 20 year candlestick charts. First I will need to calculate some bullish price objectives. I will do that with Fibonacci Extension Tools, Retracement Tools and trendlines. Then I can decide which of the banks that I reviewed is my favorite bank stock.
Bank of America (BAC)
This first chart is for Bank of America (BAC). If BAC's share price is going to try its hand at a full retracement of its downtrend, its share price should break above the black 61.8% Retracement Line during the current uptrend and then use that line as a consolidation area.
The current upside price target that seems most probable is the $35 price level. Considering that BAC's share price is just shy of $25 at the moment, that seems like a nice possible gain over the next year.
The chance of a full retracement of its downtrend is a possibility. But as I mentioned above, the next uptrend should end slightly above the black 61.8% Retracement Line. The black 61.8% Retracement Line corresponds with the Golden Ratio for BAC's current uptrend. The Golden Ratio is calculated by the 161.8% Target Line from the green Fibonacci Extension Tool.
If you are unfamiliar with the main uses for each tool, you may want to review the web pages for the charting tools again.
If BAC's share price reaches…...
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I calculate upside price targets for each bank listed. I then pick my favorite based on the charts.
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