Stock Market Timing. Bank of America Special report.

For the Regular Scheduled Update for Monday Morning go to http://www.shepwave.com/

Go to www.shepwave.com/blogs to read this article also.


I am writing tonight's update to share with everyone who is on our mailing list. As many of you know if you are registered with ShepWave we periodically give out Complimentary Trials and Updates via email. I had an email from a subscriber who has been with me for a few years the other day asking why I have tamed down my editorial style of writing. In past days I would sit on Sunday Morning's and write my Monday Update while watching my favorite comedy show on Fox News, "BULLS and BEARS" ; this show has some of the best comedians I have ever seen as guests. They deserve a raise. And they are all so vibrant and sure of their views. I have changed my style to just 'stick to the facts' for several reasons. The main reason is that it really doesn't matter what I think or how I feel. The goal of ShepWave is to present objective technical analysis by presenting the confirming facts through our charts. BULLISH or BEARISH We show the technical aspects to show potential action. We give entry targets for positions, Exit targets, and stop/loss disciplines.With that being said I happened to tune in to CNBC one afternoon last week. Another fine channel full with some very 'fine' comedians. Jim Cramerr ( I think that is his name) was 'yelling' about Bank of America (BAC). At first glance I had to agree with his analysis. BAC does have a nice yield. But, the fact occurred to me that there is overwhelming evidence to show that this country is in a major Credit Bubble. Consumer Credit is at All Time HIGHS. Not only in actual dollar amount but also when compared to personal income levels and GDP. Bankruptcies are at all time highs. So are Foreclosures. One can find examples in almost any neighborhood of foreclosures where homes are selling for 3/4 (or less) of their value. How would this effect the future of BAC if this Bubble were to 'burst'? Enough ranting from me. Now to the charts of BAC.(CHART REMOVED) The Monthly chart of BAC actually possibly supports Cramer's analysis. WOW. What a nice run. Now when the markets dipped after the highs of 2000 BAC went to 16 buck range. For Long Term Investors of this stock. Use 38.97 as a breaking point. That is the 50 Month moving average. This chart shows that this stock has been a winner and 'could' keep on a winning streak.(CHART REMOVED)The weekly chart of BAC above still shows some confirming strength behind Cramer's Bullishness. BUT, Notice that we highlight two price areas in the chart above. For Investors/traders of this stock. A double break below the $42.70 area would issue a sell signal for this stock. Once this occurs keep a trailing stop to ensure profits or minimize losses. Your target would be $29.79 area. That would be a fibonacci 61.8% retracement of the rally of wave 3 as labeled in the chart above.(CHART REMOVED)The Daily chart of BAC above shows the Preferred Elliott Wave Pattern from the Lows of Mid 2001. Notice 911 had little 'lasting' effect on this stock; an initial 20+ percentage sell off followed by a very nice rally.. That in itself is impressive. BUT, notice that we could be ending a wave 3 up. (This could be a wave C ; the stock hasn't been around long enough to give a super cycle degree count). Using Fibonacci our next upward target for the stock would be the $53.50 area. That would make wave 5 (blue) equal to wave 1 (blue). The reason I highlight this stock is that although there is no 'real' technical evidence to give reason to SELL it. There is enough evidence be cautious. Keep the above levels as stops if you are a long term investor. But, also keep in mind the overwhelming evidence that we are most likely in a primary degree wave 2 (ending) for the major U.S. Indexes.That is all for tonight's special update. I will try to publish more of these to those who are on the mailing list. Have a beautiful.ShepWave has identified several Long Side and Short Side Trading Opportunities for the indexes (ETFs) lately. Longer term Preferred Elliott Wave Theory counts are being strengthened. Go to Monday Morning's update for analysis for the markets for the up coming week. Our Option Trade for GOOGLE (June) saw a profit of over 50% in less than one week after we entered the position last Monday.May you live in the 'spirit'.


Shep