Year Long Chart View of Key Support in GS and JPM

May 21, 2010: 2:25 PM CST

Financial companies caught a strong bid this morning, rallying sharply despite news that Congress (the US Senate) cleared a hurdle to approving the Financial Regulation Bill.

Chart-wise, leading stocks like Goldman Sachs (GS) and JP Morgan-Chase (JPM) were at absolute “make or break” support levels… and so far, they’ve held.  Let’s see them.

First, Goldman Sachs bounces off year-long support:

This morning’s low of $135.95 was roughly $1.50 away from the $134.35 low of July 8, 2009, which would have flashed a 52-week low (making headlines, perhaps?) if Goldman shares traded that low.

Buyers stepped in and supported the stock at this absolutely critical support level, and we now see a 3% rally so far in price.

We also see a lengthy negative volume divergence and a positive momentum divergence – both of which are bullish chart signals – but put the volume signals in context.  Goldman has been the subject of an SEC Investigation and has made headlines as key officials were brought to testify before Congress, spooking investors.  Once the initial shock wore off, volume trailed lower.

Still, if you are trading this stock long or short, watch $135.00 as a potential game-changer which will likely send the price even lower if sellers can get us under $134.00 to flash a new 52-week low along with the news that would generate.  Otherwise, buyers could support shares at this level.

Next, JP Morgan holds the February 2010 low:

While Goldman Sachs bounces off a July 2009 low, JP Morgan Chase is bouncing off the February 2010 low at $37.00 per share.

Buyers so far have swooped in to support price here, sending its shares up over 4% so far today.

Like Goldman, a break under $37.00 sends us back to levels not seen for a year… though technically JPM would not make a 52-week low unless we saw price under $32.00 per share.

Still, a break in a key support level like $37.00 here does set a chart target to test the July low at the $32.00 level, so again keep that in mind.

Watch what happens here – whether we keep bouncing in a rally, or we – in the words of Jim Morrison – “Break on through to the other side!”

Corey Rosenbloom, CMT
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2 Responses to “Year Long Chart View of Key Support in GS and JPM”

  1. terlyn Says:

    Does the double top mean anything in this context?

  2. anoopsan Says:

    Dow jones 5 minutes chart breaks out of an inverted head and shoulders pattern.

    thank you