Tuesday, July 14, 2009

A Chart a Day #5: Goldman Sachs (GS)

I know what you're thinking; "he's gonna go on a rant about how Goldman runs the US government, scams the taxpayer, creates bubbles, etc, etc." Well, you'd be thinking wrong because I'm not going to call Goldman a vampire squid, or harp on how people are pissed that they profit huge while America wastes away. Nope, I'm just gonna post a chart, cause thats all that matters if you want to make money in stocks.

On this three year chart, weekly time frame, I see a massice head and shoulders top which completed about a year ago. Within months the target had been met, a staggering 66% decline from the neckline. I see that GS has since recovered all of that loss and now is finding resistance at the neckline. While expected resistance is being felt at the $150 neckline, the chart remains bullish. There is a solid up channel in place that GS currently lies near the middle of, the 50 dma is above the 200 dma and both are rising. About the only negative thing I have to say about the GS chart is that volume has declined on this rally. Agressive traders might try to make a move near the $150 pivot, playing a breakout above or trying to swing it lower. Personally, I wouldn't bet against GS unless that upchannel broke on a surge in volume and given the overhead supply I wouldn't go long either. But thats me.


Anonymous said...

Awesome post! Looks like if it can break out above the neckline it can go for a test of the head. I like a strangle on this market, possibly Jan10 $210 Calls and $80 puts.

Anonymous said...


pythagoruz said...

Yeah, agreed. GS remains bullish and today it broke out above that neckline, look for $150 to act as support now.

On "S&P 500 could be set to drop … soon," nice article. We've noticed that H&S pattern in the S&P but frankly, I think there is a strong argument for a resumption of this uptrend. The S&P had a golden cross recently and has been finding support at its 200dma. The volume did not surge after that neckline broke briefly last week and the market just isn't acting all that bearish.

I'll post an S&P chart soon but if I were betting on the S&P right now I'd aim for at least 1k.