In today’s edition of the Daily Stock Report, we feature Goldman Sachs Group Inc. (GS). We last looked at Goldman Sachs on July 21st when the shares were trading at $708.26. The shares moved into the favoured zone in the SIA S&P 100 Index report on May 13th at a price of $603.81, shortly after the market drawdown in the first quarter of the year. At the time of the July commentary, the shares had already experienced a 17% increase in price. Since then, the shares are at $815.21 as of yesterday’s close, representing an additional 15.10% price return and a total price gain of 35% since the initial entry into the favoured zone.
Many advisors hesitate to look for names in the favoured zone, particularly if they have held that position for some time, due to concerns that the shares may be overvalued and nearing a top. However, SIA believes in focusing on names showing the most relative strength since that is where the majority of market participants are positioned. SIA’s Proprietary Algorithm is geared toward a forward-looking 6-18 month investment horizon. This is a strong example of the SIA Algo at work, as the shares entered the favoured zone on May 13, which is just over the 6 month mark, and a 35% price appreciation has already occurred, not including the 1.97% dividend yield the shares pay. Goldman Sachs has shown consistent strength recently, moving up 4 spots in the last month and currently sitting in the 8th spot in the SIA S&P 100 report.
Looking at the 1 year daily candlestick chart to analyse the most recent price action, the shares have been in a steady uptrend of higher highs and higher lows since the spring when markets recovered from the first quarter jitters. The last high was in the second week of November at $840, followed by a pullback that still maintained the trend of higher lows in the third week of November, finding support at approximately $775.00. Currently, the shares are attempting to move back toward the previous high at $840.00. For now, the trend of higher highs and higher lows remains firmly intact.
When looking at a 2% scale on a Point and Figure Chart to identify more precise support and resistance levels, the shares had been in a very strong uptrend with a column of rising X’s lasting 28 boxes from May of this year to October of this year. This was followed by an orderly uptrend of higher lows and higher highs in the past month or so. The shares pulled back to the 3 box reversal in both November and this month. With the shares currently at $815.21, GS is attempting to trend toward its 3 box reversal to the upside and this will be confirmed when the shares reach the prior high at $843.95, which will act as near term resistance. If the trend continues and the shares make a higher high, next resistance above this point is $878.05 and $913.52 based on measured moves. On the downside, if the shares cannot hold the 3 box support at $764.40, next support below that is $734.71. With a SMAX score of a perfect 10 out of 10, GS is showing very good near term strength against all the asset classes.
The Goldman Sachs Group Inc is a leading global investment banking firm whose activities are organised into investment banking (20% of net revenue), global markets (45%), asset management (20%), and consumer and wealth management (15%) segments. Approximately 60% of the company’s net revenue is generated in the Americas, 15% in Asia, and 25% in Europe, the Middle East, and Africa. In 2008, Goldman reorganised itself as a financial holding company regulated by the Federal Reserve System.
Disclaimer: SIACharts Inc. specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investors investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIACharts Inc. nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.
