A Quick Look at Goldman Sachs GS

Sep 17, 2008: 10:29 AM CST

Goldman Sachs (GS) has held up remarkably well throughout the 2008 Financial sector decline, but even it is now not immune from sharply and rapidly declining prices, as the markdowns in the Financial sector continues.  Let’s look at the multi-time frame charts of Goldman (GS) to see if there’s any clues or to assess what’s happened.

Goldman Sachs (GS) Daily:

Goldman had entered a declining channel formation (not drawn) on the daily chart with the $150 level as key and major support.  Why was this price significant?  Beyond being round-number support (tested four times), it was also the 50.0% Fibonacci retracement of the 2002 low to the 2007 high (shown on the Monthly chart at $153.30).  When looking at stocks, it can be extremely beneficial to rise to the monthly chart and determine large-scale Fibonacci retracements.

That being said, Monday brought on the large price decline across the market and Goldman was quite volatile – gapping down to $142, rising to virtually fill the weekend gap at $150, and then closing down on the day at $135 (after testing $130) which all makes up roughly a $20.00 range.  Tuesday brought the earnings report for Goldman, which actually did well, and though Goldman opened sharply lower, it managed to fill the overnight gap, adding intense volatility and opportunity for intraday traders.

However, today’s action has GS gapping down to $120 and then plunging very rapidly to $100.00 per share (low so far on the day).  That’s a roughly $30 swing and – as of the time of the posting – the day is only half-complete.  That’s stunning.

Goldman Sachs (GS) Weekly:

Pulling the chart back to the Weekly chart exposes a symmetrical continuation triangle and a clear and confirmed down-trend in prices.  We’re registering a new momentum low on the weekly chart and a breakdown of the triangle formation, with a potential price target near $100 per share (the height of the triangle is roughly $60, and subtracting $60 from the breakout level around $155 actually gives a $95 target).  That target has roughly been achieved in less than one week – a nearly unprecedented technical resolution for such a large company.

The Monthly structure shows the amazing run-up and sell-off, and I’ve overlaid the large-scale Fibonacci retracements.

Goldman Sachs (GS) Monthly:

We draw the Grid from the 2002 price low to the 2007 price high and then calculate the Fibonacci retracements as shown on the chart.

The $153 level was able to provide initial support, but once broken, it sets up a test of the 61.8% retracement which actually came immediately after the violation.  Unfortunately, price is quite beneath the 61.8% level, and that is a significant development.  Notice also how the 50 week EMA contained price as support until broken (as did the 20 month EMA contain price as support).

Continue to watch this stock closely, as well as the implications for the broader market.  Things are happening so quickly.


1 Comment

One Response to “A Quick Look at Goldman Sachs GS”

  1. adam b barkeloo Says:

    You do really good and thorough work. It’s clear to me that in times such as these, no formations or technicals matter.