“How to swing trade GS” is the number 1 question I’ve received over the last couple of weeks.
Since the company missed earnings for the most recent reported quarter, the headlines have been less than friendly…
“Why Goldman Whiffed On Earnings”
“Has Goldman’s Trading Prowess Diminished?”
“Goldman Said To Get Burned In Rare Trading Miss”
And so on and so on…
Don’t get sucked in.
It seems there’s always a new article predicting the demise of GS…
They have yet to be right.
While this time may be different, if you’re a true chartist, you know that only price action AND market confirmation can tell you likely direction.
And with that backdrop…
The charts suggest there may be other things going on…
For example, on the monthly chart we see that the drop in GS coincided neatly with the first breach of the previous all time high… from 2007. Those who trade price action know that a pullback from a new all time high is not an unusual occurrence… and, in fact, is quite common.
Further, the first stop on this classic pullback is at the support level around $220 (horizontal line). Price has reacted and continues to react to that level as I type this post.
The big rising trendline on the monthly is also a strong indication of the power of this trend.
Finally, there’s another support zone (TAOST Magnet) on the weekly chart (rectangle between $183 and $197) that has consistently proven itself a good zone to watch for market tells regarding an impending bounce or a continuation lower.
Metrics As of Midday 26 April 2017
The Trader Says:
Though I’ve written about GS before, as an alumnus of “the squid” I’m often reluctant to say anything positive about the company or stock…
So I’ll give a warning instead.
If you’ve followed me for any period of time, you know that I’m against all but the most skilled and informed traders shorting individual stocks.
Double that sentiment for GS…
While there will always be opportunities to make money on the short side… the stats are not in your favor… especially when it’s structured like this.
It would be kinda like playing catch with a Ginsu knives for profit… Great until…
If you want to know how to swing trade GS, here it is… Until there’s a change in the underlying structure of Goldman Sachs’ stock, the only course for simple traders is to look for low risk buy setups against good support levels.
Hope it helps.