Trade of the Day: Bank on Goldman Sachs Group Inc

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gs stock - Trade of the Day: Bank on Goldman Sachs Group Inc

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With major banks like JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) kicking off earnings season this week, it’s once again time to take a closer look at opportunities within this space. Although Goldman Sachs Group Inc (NYSE:GS) is not scheduled to report its latest batch of earnings until next week, on Jan. 17, the stock continues to look giddy for another and potentially meaningful move higher.

For perspective and so you know, when I last offered my thoughts on Goldman Sachs on Dec. 13 I said that the stock looks to be coiling up in multiple time frames.

This same analysis still very much holds true, but an update is required into this earnings season.

GS Stock Charts


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Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week

On the multiyear weekly chart, note that the big breakout in November 2016 following the U.S. election results got the animal spirits going but that momentum stalled out in the first quarter of 2017.

GS stock then settled in to a lengthy consolidation period that however looks to have been constructive.

One of my key themes for 2018 is that we will see a notable increase in investment banking (m&a) activity in 2018 as a result of the U.S. tax package now having been passed. This of course would then have a positive impact on investment banks such as Goldman Sachs

If you would like to find out the rest of my 2018 themes, particularly the ones for the first quarter, please join the special 2018 Q1 trading and investing themes webinar on Thursday by registering here.


Click to Enlarge

Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day

On the daily chart, we see that GS stock had a constructive rally in Dec. 11, 2017 but due to a lack of upside momentum within the financial sector and indeed the broader US equity market in the back half of the year, the stock stalled out and consolidated further.

From where I sit this second-half December consolidation period could be labeled a bullish flag pattern (green parallels) that ultimately stands a good chance of resolving higher.

Very simply, a break and hold above the $260 area should lead to a next upside target closer to $280.

Check out Anthony Mirhaydari’s Daily Market Outlook for Jan. 10.

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