Why Bank of America Is Booming Today

What goes down must come up. That succinctly describes the last five days of trading, not just for Bank of America (NYSE: BAC  ) but for the rest of the big four banks.

Up, up, and away
But before we dive into that, here's a quick overview of where B of A and its peers are at the start of the trading day:

  • B of A is up 1.16%.
  • Citigroup (NYSE: C  ) is up 0.77%.
  • JPMorgan Chase (NYSE: JPM  ) is up 0.62%.
  • And Wells Fargo (NYSE: WFC  ) -- never quite as volatile either up or down as its big-four peers--is up 0.54%.

Foolish bottom line
If you go to your favorite finance website, pull up each of the big four banks, and look at their performance on a graph over the last five business days, you'll see pretty much the same thing: big drops on Wednesday and Thursday, followed by slow climbs out of the basement on Friday and Monday, and sizable gains yesterday.

The big crash last Wednesday came on the results from B of A's first quarter. Earnings were healthy -- healthier than most investors probably had a right to expect -- but because the superbank missed analyst expectations (by two measly cents) a general sector landslide started, which took down not only B of A, but the rest of the big four.

There really aren't any other plausible explanations for last Wednesday's big-four dive and their slow but inevitable pullout. The market freaked out over a $0.02 earnings-per-share miss. That's it. And now the market is finished freaking out. End of story. So what can you expect to see today? Like yesterday, expect to see gains across the banking sector as last week's panic begins to subside.

Always remember that investing Foolishly is about investing for the long term. Once you begin investing, it doesn't take long to see crazy up-and-down gyrations like this. The most important thing is to keep an eye on your company's fundamentals. Check in once a quarter. If you like what you see, keep your money right where it is. As for Wall Street expectations, feel free to blithely ignore those. 

Looking for in-depth analysis on Bank of America?
Check out this Motley Fool premium report -- expertly researched and written by top Motley Fool banking analysts Anand Chokkavelu and Matt Koppenheffer. They'll help you lift the veil on the bank's operations, and give you three reasons to buy and three reasons to sell along the way. For immediate access to this eye-opening report, simply click here now


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