Insights 
VT 
The Buying Zone Rebound
Bank of America’s (BAC) stock has rebounded from the Buying Zone, after completing a decline at the Equal Legs area, called the Blue Box. The analysis indicates the stock is in a wave (4) pullback, forming an Elliott Wave Double Three pattern, with the Blue Box set at 48.53-46.8.
All long positions in BAC are now risk-free, with partial profits taken. The stock showed a positive reaction from the Buying Zone and could increase further to the 53.95-55.69 range, as long as it holds above the pivot at the 48.32 low.
The analysis suggests avoiding selling BAC, as the main trend is currently bullish. It forecasts at least a 3-wave bounce from the Blue Box, with stop-loss set just below the 1.618 fib extension at 46.8.
The Technical Setup
The technical setup for Bank of America appears strong, as the stock has held its pivot at the $48.32 low and is showing upward momentum. We see this as an opportunity to buy near-term call options, targeting strike prices of $53 or $54 to capture the expected move toward the $55.69 resistance area. This bullish view is supported by BAC’s recent Q3 2025 earnings report, which beat expectations due to a 5% year-over-year increase in net interest income.
Despite our confidence in BAC, the broader market is sending mixed signals, with the Dow Jones struggling and general market volatility on the rise. Therefore, we believe it is wise to hedge any long positions in individual stocks by purchasing put options on a broad market index like the SPY. With the VIX index currently hovering around an elevated level of 23, portfolio protection is warranted against potential downside from escalating trade tensions.
This market uncertainty is largely fueled by widespread bets on an impending Federal Reserve rate cut, a theme that has also pushed gold prices toward $4,300 an ounce. Looking back, the stubborn inflation we saw throughout 2023 and 2024 has finally eased, with the latest September 2025 CPI data coming in at 2.8%, giving the Fed more justification to consider easing its policy. The persistent softness in the U.S. dollar is a direct reflection of these rate cut expectations, creating opportunities in forex markets as well.
