05/31/2022
Easy money is off the table… rates are on the rise… and lending will eventually pick up.
For these reasons, I like the banks…
…but not yet.
(Source: giphy.com)
There’s still time before Financials adjust.
Right now, most equities are simply trading alongside the market (except for Energy) and because of this, I’m waiting patiently…
And when the time comes, who better to look at in Financials than Goldman Sachs Group, Inc. (GS)?
Above is a look at the daily chart and we’re focusing on this rather than shorter time frames to really nail down the swings.
As volatile as it looks, GS has a smooth chart if you know what to look for…
GS is a name that stays extremely liquid for both options players and stock traders, so it’s a favorite of many… and to an extent, it trades reasonably pure.
Since its top in the fall of 2021, it’s traded in well-defined ranges as you can see from the support and resistance channels (red and green horizontal bars) and the Standard Deviation Channel.
Being that the stock is in a downtrend (along with everything else), GS has continuously downshifted levels beginning in January with subsequent stretches to upside rejection.
Notice how the bottom pivots coincide with the first week of the month…
Last week, the continued move out of the low ground led to a breakout from the ATR Baseline (red-to-green channel), which is bullish… but these have been short-lived.
(Learn more about the indicator at this link here.)
The “new” resistance appears to be in line with a projection from the Volume Profile (right) at about ~$335.00, give or take, which is also sitting just under the Value Area Low (red and white arrows).
Check the shift in shading on the Volume Profile…
Beyond this? You’re talking about attempting to break a well-established resistance level (middle red channel) and trendline (circled in red) at ~$345.00…
On the lower chart, volume is still falling and the Squeeze Trading Tool 1.0 via Chris Hood shows a near overbought reading on the Stochastics (green arrow). And from here, I’d assume more of the same…
I’ve drawn in what is the likely trading pattern in the white highlighted column.
Nail the exit and wait for the next setup.
(Disclosure: I hold no position in GS.)
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
