Thursday, July 9, 2009

Trade Alert: GS



Well morning has broken and how. As feared Goldman Sachs rebounded powerfully today gapping almost four dollars on the open. Apparently it's too unseemly to have Goldman Sachs trading below $140 and the specialists seems determined to keep it above that. As you can see in the five-day chart above they are trying to push it back above the local high of $147.



Now take a look at the 10 day chart below. You can see a high last Tuesday of $149.02 followed (significantly) by a lower high of $148.87 on Wednesday of last week. As you can see the trailing lower highs including today's high of $144.44. A series of lower highs is by definition a downtrend, so even though they got Goldman Sachs back above $140 they weren't able to break the downtrend that is developing.



The strength of the downtrend line is even more pronounced in the 52-week chart. Notice the descending 100 day and 200 day moving averages. actually $150 looks like resistance right about now and if you wanted to be little bit aggressive you could short Goldman right here with us stop just above $150.

I think shorting Goldman Sachs will be a very profitable, it's already in a downtrend. But we don't want to be too aggressive and we certainly don't want to guess, be patient and trade the break.

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