The Q3 Earnings Season – Bank of America

So far, for the major banks in the United States, 2019 has been a profitable year (as you can see in the below chart), however, last month’s fears of global growth both helped the banks but also dented their stock market performance.  Let’s see how.

Usually what happens in a mixed financial situation in the market is that investors will search for safe havens, and this is how the banks can use the opportunity to get more investors by selling them Gold,  having their cash as USD since the United States Dollar is one of the most popular safe havens, or sell them in a  Bond market rally – as BoA also has “Bank of America Corp.-Bond (US338915AM36).” So they can grow the cash and then it is their turn to use the funds.

Since last December’s market low, the BoA share price has mostly accrued and has not given the chance to new investors to log in to the market and buy the new shares. Ahead of the Q3 report today the market has been mixed and raised hopes for new investors to buy the shares at a lower price thanusual, however the question is: Will the Q3 earnings be an opportunity to pick up more shares for a longer-term investment? There are two key issues:

  1. Bank’s stocks are facing some pressure from the FED rate cut policy, however, subsidiary companies are generating substantial profits and using the cash generated to return massive capital to shareholders, so while rate cuts are a negative for the Banks at first, investors are optimistic in the long term.
  2. The BoA share price, compared to its competitors in the stock market, are cheap and that attracts more interest for buyers to invest in them, as the current price for BoA shares is lower than $30, compared to $120 for JPM and $202 for Goldman Sachs.

Note: Having a lower share price than competitors by itself does not technically mean that it is “cheap”, however, psychology often plays an important role and often attracts the attention of smaller or even new investors, especially.

While we are waiting for the Q3 earnings report of BoA today (before the US market opens), yesterday we had the reports of two other major banks:-

JPMorgan (NYSE: JPM) gained 2.2% after reporting strong earnings and record revenue, due to strength in the bank’s bond trading and underwriting businesses, as well as its credit card business.

Goldman Sachs (NYSE: GS) slumped 3% after posting earnings per share of $4.79, below consensus forecasts.

Technical overview:

The technical chart shows the trend in a very positive direction, while from the latest decline, it  has already recovered most of the loss and is now trading above the 88.6% Fib, while yesterday in the NY session it tested above $30 and 100% of the Fibonacci level. Immediate support level sits at $28.58,  its 50% Fib levels, as well as the crossline of EMA50 and 200 periods, S2 sits at $27.80, while $30 is a psychological level resistance to $31.90 and then all-time high at $33.05 as the next levels in the uptrend move.

Q3 Estimated by Zacks

EPS – $0.68, 12.12% YoY Decline

Revenue: $22.20 billion, 2.54% YoY Decline

Click here to access the Economic Calendar

Ahura Chalki
Regional Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Previous articleThe Q3 Earnings Season – Netflix
Next articleCPI Day – But Bigger Issues Persist
اهورا چالکی - تحلیلگر منطقه ای بازار - با بیش از 12 سال تجربه و مشاوره مالی در بیش از هشت کشور مختلف، اهورا چالکی رهبری است که همیشه به ایجاد راه هایی خلاقانه برای اجرای موثرتر ایده هایش فکر می کند. ویژگی هایی که او را بهتر توصیف می کند پرشور، رویاپرداز و سخت کار می باشند. این توانایی ها همیشه در انتخاب آسان ترین راه و همچنین برای توصیف استراتژی های تجاری در کلماتی که آسان و قابل درک برای دیگر معامله گران و دانشجویان نیزباشد، کمکش می کند . اهورا از سال 2006 در بازارهای جهانی سهام و اوراق بهادار فعال بوده و همچنین یک شرکت مشاوره ای برای کمک به دیگر معامله گران برای ارتقائ مهارت های خود، در کنار همکاری مستقل خود با شرکت هات فارکس ایجاد کرده است. معامله در بازار سهام بخش مهمی از زندگی اوست و او معتقد است که این یکی از لذت بخش ترین فعالیت هایش در زندگی است