The Chart du Jour

BankAmerica Trouble

January 19, 2001

By, Barclay T. Leib

Chart produced using Advanced GET End-of-Day

Courtesy of bad loan write-offs, BankAmerica has taken a several negative shots across its bow of late, only to bounce back. In addition, its chart pattern is rather sloppy -- particularly from an Elliott wave perspective. But as we grope to discern any larger trend in the equity markets (while having warned of late that the broader indices appeared rather congested), we thought it worth pointing out the Fibonacci rhythm above. Bank of America's recent highs and lows (marked by the red arrows) seem to fit this chart's price action the best should this stock eventually fall to a low near $30.50!

With metals also recently starting to perform better, we continue to look at stocks within the financial sector with a great deal of suspicion. If there is one place to be focused on for possible short selling opportunities, it is likely here in BankAmerica and in its other brethren -- the stock of Morgan Stanley Dean Witter that we have previously suggested should be a sale in the $80-$88 region.

If BankAmerica or Morgan Stanley were to start breaking down at this stage, this will likely mean that the equity strength (if you can call it that) that we have been experiencing since Jan 4th to present is about to peter out -- at least for a while. We continue to have mixed feelings about the broader indices, but BankAmerica and Morgan Stanley may be two places to look for further clues as to this market's true underlying health or lack thereof.

We turned positive the markets back in our January 4th missive to subcribers. Some of our longer term prognostications on possible new highs in the DJIA may still come to pass with time. On an intermediate basis, continued rally attempts into June of this year remains our overall intermediate term view. But just basis the current look and feel of the BofA chart above and the Morgan Stanley chart at this time, we need to move from the neutral-positive camp to the neutral-negative camp for the very short term.

There is no doubt that this is now a trading market, not a buy-and-hold affair as CNBC would somehow still like us to believe. Don't mind us as we attempt to be nimble and look to establish a few selected shorts at this time.

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