Goldman Sachs Group Inc. (GS), along with the broader banking and brokerage sector, has been experiencing a significant rally this year. GS shares proudly holds the #10 position in the SIA S&P 100 Index Report. Also situated in the Favored Green Zone are shares of JP Morgan, American Express, Bank of New York Mellon, Capital One, Wells Fargo, and CitiGroup, with many others positioned in the Neutral Yellow Zone of the report. Additionally, within the broader market and small to mid-cap space, most regional US banks are also showing strong performance in their respective index reports. Against this backdrop, let's explore Goldman Sachs in more detail, starting with its relative strength chart. Having surged to the top of the SIA S&P 100 Index Report in mid-August 2022, GS became a leading index contributor during the winter of 2022. However, it retreated from that position in the spring of 2023, only to begin rebuilding its strength again in winter 2023. During this period of relative strength, the shares began forming a wedge pattern (see candlestick) within a declining trading range of $375 to $275. This wedge gradually narrowed between the $300 and $350 levels before decisively breaking out in early 2024. This breakout aligns with Goldman's ascent up the relative strength charts to its current levels. The sector's broadening strength, coupled with the emergence of new leaders like Goldman and JP Morgan, suggests that the rally is sustainable. Given the weekly candlestick's limited ability to establish clear support and resistance, our next step will be to analyze our point and figure chart.
The point and figure chart depicts a similar consolidating wedge as seen on the candlestick chart, with a channel high of $394.24 and low of $260.11. As price discovery narrowed, the first series of breakouts occurred with double tops, followed by spread double and triple tops, culminating in a major long-term breakout at $394.24. We have also incorporated the colored RS matrix position overlay feature, illustrating leadership alongside stock movement. Interestingly, even during the stock's rally, it remained in the Unfavored Red and Neutral Yellow zones, likely overshadowed by dominant technology names like Nvidia. On the chart, initial support is noted at the 3-box reversal level of $461.91, followed by previous long-term resistance (now support) at $386.51, with further support levels at $364.22 and $343.21 highlighted by green lines. Resistance, based on a horizontal count, suggests levels around $509.99, with a psychological barrier at the $500 mark. A vertical count, however, indicates longer-term resistance at $634.11, which aligns with the broader sector's strength. With a perfect SMAX score (a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, GS is showing short-term strength across all other asset classes.
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