Bank of America Corp. (NYSE:BAC) stock traded at a low of $37 on April 14, the day most of its peers reported financial earnings for Q1 2022. The earnings of the banks that included Morgan Stanley, Goldman Sachs, and Citi were disappointing. This made investors believe that BofA earnings would also come lower, accelerating the stock sell-off already in place.
The bank reports Q1 2022 earnings on April 18, and investors are already less upbeat, as they maintain a consensus EPS of $0.76, compared to $0.86 last year. Like its peers, BofA is likely to cite the geopolitical and volatile macro environment as key to its drop in earnings.
BofA stock trades at an oversold region ahead of earnings
Source – TradingView
BofA stock is already oversold ahead of earnings, with an RSI reading of 26. Historically, BAC has jumped whenever it reached such oversold levels. Nonetheless, the stock appears under pressure as it has already breached a support zone of $38.29. Although this does not clearly tell that the stock could plunge lower, there are also no short-term triggers for a bullish reversal.
With investors remaining cautious about banking stocks, BAC could rise from the oversold level, but the general trend will remain bearish. If next week’s earnings disappoint further, the stock could head lower, with the next support at $35.70. Investors should consider avoiding the stock now and buy it lower after the end of the current sell-off.
Summary
BofA stock is currently oversold but remains on a bearish trend. The company reports earnings on April 18, but there are already meek expectations. The stock could temporarily rise from the oversold level, but the trends remain against it. Investors should avoid buying the stock until a bullish reversal is confirmed.
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