Tomahawk, WI 9/03/2013 (BasicsMedia) –  Bank of America Corp (NYSE:BAC) (Closed: $14.12, Down: 0.35%) spent a quiet session on the last day before the long weekend. It opened slightly in the green but soon gave up its ground to get in the red where it remained for the rest of the session. The volume at 73 million was naturally far lower than the average volume of 111 million as evident from the price action, which created a bearish red candle engulfing the previous day’s body.

The last secular bull market of the stock was divided in 3 parts. In the first part, it ran to $50 levels from the measly low of $1.7 in the period of 1988 – 1998. The bear market of 1998 – 2000 brought the second part, when it dropped to $18 levels and started the third part of rallying to a new high $55.08 by the end of 2006. The vicious bear market next was the end of the secular bull market and hence a crash of an appropriate degree was expected. But it went beyond all imagination and dropped like a stone to hit $2.53 in March 2009, wiping out all the gains of the previous 18 years.

The drop of 2007 – 2009 was clearly subdivided in 3 parts again. A drop from $55.08 to $18.44, a bear rally to $39.50 and then another drop to $2.53. Both the drops are of the same magnitude, 37 points. That makes the entire fall clearly a Zigzag pattern and makes $2.53 as a very important bottom. Actually, if the company doesn’t cease to exist, we may not test that bottom in the next decade or so. Does that mean we are in a new bull market? The answer must be no as it needs to make a proper base before it can launch a new offensive against the bears.

The current rally is much slower compared to the earlier fall. The price could be either making a Triangle or a Complex Correction spanning a few more years to gather the right strength. In that case, we may see the stock moving in a broad range of $5 – $20.

When the price hit a high of $15.03 in July this year, it faced a strong confluence zone. First, $14.95 – $15.30 is a well established supply zone from previous price action. The 2/3rd or 66.6% retracement level of the entire fall from the 2010 top of $19.86 to the 2011 bottom of $4.92 comes at $14.90. The rally from the 2011 bottom is a nice channelled one and the upper boundary came at $15 levels too. The current rally is subdivided in 3 legs till now and the last leg achieved the ratio of 161.8% with the first leg at $15 levels.

But the lack of any severe weakness in the price after a rejection from that strong an area would keep the bears wary. The price has not signalled any reversal yet, only usual correction. As long as the zone of $12 – $13 is protected, the stock would get buying support on all dips. Aggressive investors would enter only on a firm move above $15 – $15.30 levels.

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