Why Bank of America Blasted Off

By Anand Chokkavelu, CFA | More Articles
February 3, 2012 | Comments (2)

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It was a day of milestones for the market.

We were surprised on Friday morning by a positive jobs report. The resulting unemployment rate fell from 8.5% to 8.3%, a three-year low.

That drove the Dow Jones Industrial Average (INDEX: ^DJI ) up 1.23% to 12,862.23; the S&P 500 (INDEX: ^GSPC ) up 1.46% to 1,344.90; and the Nasdaq (INDEX: ^IXIC ) up 1.61% to 2,905.66.

The Dow saw highs it hasn't seen since May 2008. The Nasdaq? December 2000!

Bank of America leads the way
All but two of the Dow's 30 components were up for the day, but Bank of America (NYSE: BAC ) was by far the biggest winner, up 5.2%. It also led all gainers for the week at 7.5%. And year-to-date (basically a month), it's up a whopping 41%!

Today reinforces that good news for the economy is good news for banking and great news for the banking laggards. Fellow doghouse tenant Citigroup (NYSE: C ) was up 4.8% Friday (28% for the year).

To keep things in perspective, Bank of America's shares have been beaten down so low that a 41% gain still has them trading at just over half of 52-week highs.

If we're in the middle of a strong economic recovery, Bank of America and Citigroup shares could be given huge boosts. On the other hand, if European woes or Chinese bubbles throw the world economy into a tailspin, B of A and Citi will have their work cut out for them.

The bottom line
I'm bullish on shares of both Bank of America and Citigroup barring an economic meltdown, but they're quite complex and opaque. So tread carefully.

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Anand Chokkavelu owns shares Bank of America and Citigroup. He also owns warrants in JPMorgan as well as long-dated options in Bank of America. The Motley Fool owns shares of Bank of America and Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Report this Comment On February 04, 2012, at 12:01 AM, JEANIE24 wrote:

I have chosen to look at my "mortgage life" with Bank of "UN" America as having survived an attack of dirty, slimey, corrupt, individuals precisecly,CEO BRIAN MOYNIHAN akin to being attacked by a pack of wild hungry wolves. Although I am NOT here to talk about any personal mortgage problem with them,thank-you very much I CAN afford to keep my house AND eat with little effort,I'm completely and always have been on time with my mortgage,no problem there.Precisely what IS my problem with BRIAN and BAC? I have been attacked by this bank in ways I can't fit into this collum.I have a number of issues that are sueable.Just for the sake of conversation I'll start with my IDENTITY STLOLEN from a BAC branch.BAC sees me as no threat, I've given them many options to clear up the 7 injustices they are being set accountable for by me,they choose to do nothing. I am looking for a law firm with a PIT BULL attitude and has the courage go up against BANK OF AMERICA in a federal court. I'M 62,FEMALE AND DISABLED SINCE 2003.NOPE MY CRAPY HEALTH WON'T STOP ME. I'm simply sick and tired of this upside down corrupt way of big business and the fact they think they are immune from the law.Remember, it took ONE WOMAN to take down the government of France,Joan of Arch,it took one woman to take down Enron,Erin Brockovich won the largest lawsuit settlement for ground water contamination for the the people and children who DIED because lawfirms didn't have the "you know what" to stand up to that huge company who KNEW damn well what was happening. Well, I guess it's gonna take one woman,ME to take down Bank of America.With my settlement I plan to open a website that will give free leagal aid to ANYONE who fears signing contracts becuse they have no one to go to and get help understanding such complex things as a legal contract.As one individual I plan to demand that any company NOT playing by the rules and ruining peoples lives be held legally responsible to pay for their selfishness. When did the world of makeing a buck come at the high price of selling your soul to the devil? Please fell free to pass this on.As for a legal team,I'm open,I'm looking and I will WIN MY DAY IN COURT!!!! I really hope to read your views and you will see more of me in the media as I build my lawsuit.I have time on my side.
Please forgive my spelling errors,etc. Typing was never one of my virtues!
Report this Comment On February 04, 2012, at 8:43 AM, AlanLee49 wrote:

just check this out: details and facts in this article:
http://seekingalpha.com/article/339261-bank-of-america-break...

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