GS

Propped by nervous shorts who evidently lack not only confidence but perhaps competence, Goldman held like the proverbial rock yesterday.  Too bad  most of those who have remained short will not make it to the promised land — a 135.35 Hidden Pivot support broached here earlier.  That might not be the worst case, either, since there’s another equally important Hidden Pivot support at 124.79.   It could be over for Goldman, since, as a result of the civil fraud action brought against the firm by the government – and possible criminal charges to come –  they will remain eminently sue-able till the cows come home.

Although the 151.00 Hidden Pivot seems to have arrested Goldman’s so-far 35-point plunge, the stock is not yet out of the woods. The minor uptrend projects to 159.76, or perhaps 160.85 if any higher, but we should like to see a print exceeding 169.00 before we assume that the worst is behind.

Goldman did not get clobbered yesterday by the selling that brought the broad averages down. Instead, it bottomed just 85 cents below a key Hidden Pivot support at 151.00 that I’d identified earlier. It will of course take more than that to turn the stock market around, but we shouldn’t dismiss the psychological importance of this stock’s resisting the bearish tide — especially when the company itself was getting clobbered by an inquisition on Capitol Hill as stocks were dropping.  Some subscribers evidently made hay with the forecast, although it took guts to ignore what was going on elsewhere in the market.  Looking just ahead, the stock will need to hit 157.96 to further distance itself from jeopardy. The trend was down at the close, and GS appeared to be holding on by a thread.

It is entirely conceivable that the SEC’s lawsuit will be the beginning of the end for Goldman Sachs & Co., since class-action suits likely to follow are potentially endless.  Meanwhile, I am holding to my “hula prediction” that the stock eventually will trade under $30, but I must mention that, at the moment, GS does not look like a disaster from a Hidden Pivot perspective.  See for yourself, since, as the daily chart makes clear, the stock’s steep dive this week failed to create a bullish impulse leg.  This fact amazed me when I first confronted it, but I cannot simply ignore the evidence just because I believe deep down that the company is a dead duck.  There is no impulse leg here (i.e., on the daily chart) because the stock had two good runs at the #2 external low but couldn’t crack it.  The retracement rally has since gone far enough to produce a legitimate B-C leg (relative to one-off A=182.01, 15m),  and we’ll be watching closely to see whether the next bout of weakness cracks the midpoint support of the  ABC pattern thereof.

After failing to seize the opportunity last week, Goldman has receded back into doubt, perhaps dooming the broad averages to purgatory in the absence of bank-stock leadership.  The nearest downside target of consequence lies at 167.88.  That’s a Hidden Pivot support, and although it’s too close to a key low at 168.00 recorded on March 9 to be perfectly useful for bottom-fishing, we might nevertheless infer from its breach that the recent weakness in this once world-beating stock is likely to persist.

Goldman’s spectacular bear rally is within striking distance of regenerating itself, since all it would take to create a quite potent impulse leg on the daily chart would be a $3.23 rally above Friday’s highs. Meanwhile, a mere 55-center above the peak would meet the minimum requirement  of surpassing one “internal” and one “external” high.  With the financial stocks in gear, the nearly 13-month-old bear squeeze would be in good shape to continue through Spring.  Actually, if the stock breaks out in the manner shown in the chart, it could get to 206.80 – a 17 percent move from these levels — in a hurry.

The lazy symmetry of the pattern shown in the chart lends weight to the prospect of a rally to 177.00, the pattern’s Hidden Pivot midpoint.  Longs can use the resistance as a minimum upside objective and target, but also as a place to reverse polarity and go short with a tight stop-loss. I’ll provide more-detailed guidance if and when the stock gets there, since we should be eager to short this flying pig whenever risk:reward is in propitious balance. ______ UPDATE (March 15):  The stock appears to have peaked at 176.34 after rallying since January from around 148.  The best opportunity to get short is past, but in theory, close monitoring of Goldman’s progress as it closely approached an intermediate-term target could have gotten us short via the first subtle abc downtrend from the actual high.

Goldman squandered an opportunity to turn vicious yesterday, lunging above two “internal” peaks on the hourly chart in the opening minutes of the session, then failing to go for the gusto by taking out the “external” peak that I’ve labeled on the chart. What this suggests is that the next rally cycle is doomed to fail.  From a trading perspective the stock remains a long-term short, although the opportunity to do so does not appear to be perfectly ripe at the moment.