Anyone who wants to know what’s on the stock market’s evil little mind need only monitor the behavior of one stock: Goldman Sachs [NYSE Symbol: GS]. These days, Goldman is the high-beta vessel of whatever madness appears to rule at a given moment. As such, it’s often possible to predict the stock market’s histrionics based on Goldman’s crazed leadership.
Yesterday morning, for instance, we were expecting the stock to shoot up to 131.80 – about $8 above last week’s settlement price – and to drag the stock market along with it. In a trading tout disseminated to subscribers late Sunday night, here’s what we foresaw:
“[Last week’s $10 finishing stroke] was a short-squeeze truly worthy of the name, since it came on news that Goldman Sachs plans to float a zillion new shares while the gettin’s good. We hesitate to predict how high the squeeze will go, especially with index futures evidently under pressure Sunday night. But our hunch is that stocks will get dragged higher by Goldman rather than the other way around. If so, look for the rally to continue to at least 131.80, a good place to try shorting on your terms with a tight stop-loss.”
New Rally Targets
We didn’t get the short off because GS peaked yesterday at 131.27, a tad below our target. However, earlier in the session, when Goldman pulled back a bit, we put out a bulletin recommending that subscribers add some bullish call spreads to an existing option position. Specifically, we advised buying the April 130-135 vertical spread for 1.60. (We already owned the spread a few times for an average 0.36.) We have been expanding our option position for the last few weeks, trying to build a profitable edge across a wide price range. As of yesterday, with a position that included July/April 115 and 120 calendar spreads bought, respectively, for 6.80 and 9.80, we stand to profit no matter where the stock is trading come Friday.
Incidentally, yesterday morning we raised our minimum projection for GS shares to 143.02, a Hidden Pivot. This implies that we will also need to raise our target for the Dow Industrials, which we originally saw topping at 8107. As long as Wall Street’s whackos are intent on doubling the price of Goldman shares from their recent lows, the short-squeeze that has been driving stocks relentlessly higher is all but certain to continue.
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Rejoice US Taxpayers!!!!
>>From The Business Insider: Goldman Sachs set aside $4.7 billion
for salaries and bonuses last quarter, after taking in a profit of $1.7 billion.
That means Goldman’s employees stand to profit far more than its
shareholders from this quarter’s outperformance.
The $4.7 billion in compensation is 50% of Goldman’s total revenues
for the quarter. The first quarter of last year, compensation ate up
just 48% of Goldman’s revenues. As Heidi Moore at the Wall Street Journal reports,
Goldman’s rising compensation comes despite the fact that the firms
has cut its headcount by 7% since the end of last year.
That means that the remaining employees are each taking an even bigger slice of the pie.
The size of that compensation set aside will likely annoy current shareholders.
After all, it is almost as large as the public offering Goldman is proposing to
help it pay back TARP. If Goldman hadn’t been so eager to set aside so
much revenue to pay its employees, the current shareholders would not
need to be diluted as much to pay off the TARP. One way of looking
at it is that the execs at Goldman are basically using the planned offering
as a way of paying a special dividend directly into their own pockets.<<
Hey, I’d go to a tea party Wednesday, but they haven’t installed a high speed train in the Harrisonburg VA area to take me there yet. Surely I do not want to waste any of my precious diesel fuel as I wait for my US Govt. subsidized lithium battery conversion kit. I love Obottoma!!!