Goldman Sachs

It’s been a while since we looked in on this stock, which appears headed for 164.05, an important Hidden Pivot off the daily chart. Traders should look to do their buying using camouflage on a small abc reversal uptrend from near 152.80, the midpoint of the relevant C-D leg.

We haven’t done anything in Goldman in a while, but a moderate rally today could provide a good opportunity to get short with a tight stop-loss. Officially we’ll offer 200 shares at 136.83, stop 137.01, but if you want to use puts instead, try the August 125s.  You should pay no more than 2.80 for them, however, and the stop-loss will still apply. _______ UPDATE (11:11 a.m. EDT):  A short from 136.92 was stopped out minutes after entry for a tiny trading loss, although one could have partially covered the trade as low as 136.51. That’s how low GS dipped initially after opening on a $1+ gap. The actual high was 137.17, implying that higher highs lie ahead, but for now the stock has relapsed to a so-far low of 134.76. While it may seem as though our stop-loss was too tight, the pattern was sufficiently precise to justify the one we used. 

It’s been a while since we pondered this limping lump of brick dust, but it’s not a happy sign for bulls that the stock has slipped so easily beneath the Hidden Pivot support shown in the chart.  What it suggests is that Goldman will fall anew, this time to Hidden Pivot support at 122.25. Camouflage shorts are encouraged from these levels, but if you’ve got the patience to wait, bottom-fishing at 122.25 could provide the kind of low-risk opportunity that we thrive on.

Longer-term charts suggest Goldman will grope its way down to at least 115.61 this summer, but it’s too early to tell whether a lesser but even nastier pattern in gestation at this moment will wreak the maximum damage of which it is capable — i.e., a pounding down to 94.19.  It’s shown in the accompanying chart, and the uncertainty yet remaining concerns whether there is a pop yet to come that will invalidate the existing point ‘C’.

I’m not buying any of this — literally — since it is coming off a 133.81 low that lies almost $2 beneath  the lowest low I could have projected using the hourly chart. That suggests sellers will soon resume control, even if it  would only take a print today at 144.31 to temporarily cede the advantage to the madmen.  Incidentally, a pullback from just above 144.31 could provide camouflage for traders who want to jump on the stock for a presumptive short ride north.

We’ve been using a downside target of 135.35, but I am now recommending bottom-fishing if and when Goldman falls to another Hidden Pivot at 137.69.  I’ll update with more detailed instructions following a print within $1 of that target, so check back if you’re interested.  The target would be hit, ideally, following a slow grind lower, but if it comes in conjunction with a stock market avalanche, you should back away. _______ UPDATE (2:40 p.m. EDT):  The stock has traded down to 137.55 so far.  For your guidance I will establish a tracking position of 400 shares.  A 137.44 stop-loss is advised for now, and you should take profits on half if GS trades up to 138.69. _______ FURTHER UPDATE: The stock finally bottomed at 136.60, stopping us out for a $100 trading loss – but also warning that, despite the  nearly $2 bounce from the lows, sellers are not yet done with Goldman for the moment.

If Goldman drifts lower over the next 5-7 days, we’ll look to bottom-fish down at 136.11, the lowest Hidden Pivot target that can be derived from the intraday charts. If I can come up with a way to initiate the trade using a limit bid for some near-the-money call options, I’ll feature the trade as a Pick of the Day for all. _______ UPDATE (May 16):  Scratch Goldman from the list of stocks we’ve been watching lately, since it has become too, too boring to deserve our time and attention. My minimum downside objective is now 135.35, and I’ll set an alert there, since the support will be worth bottom-fishing if it’s ever reached — which it will be.