If you are long on Bank of America Corp (NYSE:BAC), then you’re probably in panic mode at the moment. The stock has shed almost 40% of its value since the beginning of the year (the stock has lost $2 of its value in since the beginning of July!). Take a look at the following graph (courtesy of Google finance):

Clearly, it doesn’t seem like the bad days are over for BAC, the stock is down 2% in the pre-market today, and if the trend continues, the stock may very well become a penny stock (by my definition) by the end of the year. Now seriously, how low can it go?

I think that nobody can predict the bottom of the stock at this very moment, the stock is reaching another yearly low nearly every day for the past couple of months. But one thing is for sure, this stock is now undervalued. I have already stated that BAC is a good buy when it was trading just below the $10 price, and I think it’s even a better buy right now (at $8.17), but I think one should time the entrance. Maybe buy a few hundred stocks once the stock starts showing some strong signals. However, it’s important to watch these stocks closely and take immediate action (in other words, jump ship!) once the stock goes bearish again if you can’t afford to lose any money on the short term.

I am confident that by the end of 2012, the stock will close at the $30 level, but now, only mega investors know where the bottom is. Unfortunately we (the small investors) are just pawns in this game.