US stocks have reclaimed some of the lost ground in recent sessions after President Trump agreed to a 90-day pause on almost all of his reciprocal tariffs, except those on China.
But there still are names, even in the large-cap space, that are on the verge of forming a “death cross” at writing, indicating potential for significant further downside ahead.
These include the Walt Disney Co (NYSE: DIS) and the Bank of America Corp (NYSE: BAC). But does that mean you should pull out of both immediately? Let’s explore!
Here’s why you shouldn’t sell Disney stock
Disney is currently down more than 25% versus its year-to-date high.
Still, the developing “death cross”, which is when a stock’s 50-day MA crosses below its longer-term 200-day MA, signals DIS could sink further in the coming weeks.
However, the dreaded technical indicator that typically signals weakening momentum and potential for a continued stock price decline is failing to budge, Laurent Yoon, a Bernstein analyst.
Last week, Yoon reiterated his “outperform” rating on Disney stock, adding that it’s a “complex story with constantly moving parts—linear/sports, parks, and streaming—each with significant gravity and complexity.”
Bernstein’s $120 price target suggests investors should load up on DIS shares on current levels.
Then, even if the death cross materializes and the stock declines further, investors can cost average their positions, gradually building a solid, long-term stake in Disney at more favourable valuations.
Note that Disney shares also currently pay a dividend yield of 1.18%, which makes them all the more attractive to own at current levels.
Here’s why you shouldn’t sell BAC shares
Bank of America is another stock that could soon see its 50-day MA sink below its 200-day MA, printing what is broadly known as the bearish “death cross”.
The emerging death cross sure is concerning for investors, given BAC, much like Disney stock, is already down some 25% versus its year-to-date high in early February.
However, Morgan Stanley analyst Betsy Graseck recommends dismissing such fears and buying Bank of America stock at current levels.
Earlier in April, Graseck upgraded BAC shares to “overweight”, citing attractive valuation.
She acknowledged concerns about the Fed rate cuts and yield curve shifts potentially impacting Bank of America’s net interest margin, but continues to see upside in that metric in the long run.
Morgan Stanley currently has a $56 price target on the bank stock, which translates to a more than 50% upside from current levels.
Bank of America shares currently pay an even more lucrative dividend yield of 2.84% at writing, which makes them particularly well-suited for those interested in setting up a new source of passive income amidst continued broader market volatility.
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