Bank of America: Negative Momentum Accelerates on Weak Jobs Data

Equity markets in the US were under pressure on the heels of a worse than expected employment report released by the Department of Labor on Friday when US markets were closed.  Bank of American BAC was under pressure, but there was heavy activity in the options markets.

Bank of America $9 Strike Calls doubled in price as accumulation increased by 30,000 contracts.  The calls that are showing the most activity are the weekly calls, which speculate on a move during the balance of this week.

Bank of America slumped 3.25%, falling to $8.93 per share, but off the lows near $8.70.  Support on the stock is seen near the 50-day moving average near $8.49, and then again near the 200-day moving average seen near $7.50.  Resistance on the large banking institution is seen near $10 per share which where the highs made in mid March.

With the 50-day moving average crossing above the 200-day moving average in mid March, a long-term trend is likely in place.  With the downturn in March, the MACD created a sell signal where the spread (the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread.  The index level moved from positive to negative, which is a sign of future negative momentum.  The index level of minus .13 is the lowest the index has been during the past 6 months.

The RSI (relative strength index) has declined from overbought levels seen in mid March (above 70).  The current RSI has decline below 50, which is in the middle of the neutral range.  Volume has decline on BAC and is now in below the 50 and 20 day moving average of volume.