The focus this week, even more so than the last several months, has been on Goldman Sachs (GS) as the financial leader was set to report earnings. The market's fate has largely matched that of Goldman throughout our current credit crisis as the firm with the sterling reputation provides a true litmus test of how deep our problems lie. Clearly, with the stocks strong run off lows, some confidence has been restored and the market has benefited. Whispers began early in the weak that we should expect great earnings from Goldman, headlined by a Meredith Whitney upgrade. "Buy the rumor, sell the news" is an adage in trading that generally prevails, but when you are dealing with such a clear leader like Goldman in an environment as unique as this one, all bets are off. Monday we saw the big move that seemed to price in some of the better-than-expected earnings report that seemed to inevitably come. Tuesday morning earnings came and beat estimates as had been rumored, but rather than seeing any strong prevailing sentiment, volume spiked as a tug of war ensued. The bulls and the bears pulled the stock every which way, with those seeing a head and shoulders betting on a dip, those believing in a new bull market buying with conviction and some shorts leaving the scene as most clearly were not "selling the news". The stock closed Tuesday basically flat. Today, we saw a large gap up in the morning that seemed like it would provide a good trade in one direction or the other today. The fact that shorts began to worry and get squeezed and the stock did not give back any of Monday's move signaled to us that it was time to get long for the time being in Goldman and the market. This morning as the stock could not fill the gap short, we loaded into longs in Goldman on a break of 152, the morning high. With a clear line in the sand at 145, we saw a great chance to hold Goldman for a move up to 160. As the stock lost some momentum coming up to 156, we took some profits and tiered down, and will hold some of the position, looking to buy pullbacks getting good prices for th eultimate move up to 160.
Goldman Ticket Pays Off
7/15/2009 03:01:00 PM
The focus this week, even more so than the last several months, has been on Goldman Sachs (GS) as the financial leader was set to report earnings. The market's fate has largely matched that of Goldman throughout our current credit crisis as the firm with the sterling reputation provides a true litmus test of how deep our problems lie. Clearly, with the stocks strong run off lows, some confidence has been restored and the market has benefited. Whispers began early in the weak that we should expect great earnings from Goldman, headlined by a Meredith Whitney upgrade. "Buy the rumor, sell the news" is an adage in trading that generally prevails, but when you are dealing with such a clear leader like Goldman in an environment as unique as this one, all bets are off. Monday we saw the big move that seemed to price in some of the better-than-expected earnings report that seemed to inevitably come. Tuesday morning earnings came and beat estimates as had been rumored, but rather than seeing any strong prevailing sentiment, volume spiked as a tug of war ensued. The bulls and the bears pulled the stock every which way, with those seeing a head and shoulders betting on a dip, those believing in a new bull market buying with conviction and some shorts leaving the scene as most clearly were not "selling the news". The stock closed Tuesday basically flat. Today, we saw a large gap up in the morning that seemed like it would provide a good trade in one direction or the other today. The fact that shorts began to worry and get squeezed and the stock did not give back any of Monday's move signaled to us that it was time to get long for the time being in Goldman and the market. This morning as the stock could not fill the gap short, we loaded into longs in Goldman on a break of 152, the morning high. With a clear line in the sand at 145, we saw a great chance to hold Goldman for a move up to 160. As the stock lost some momentum coming up to 156, we took some profits and tiered down, and will hold some of the position, looking to buy pullbacks getting good prices for th eultimate move up to 160.
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