Themes: US Shares, Goldman Sachs
Goldman Sachs shares closed last week at $141.87... and yet opened up this week at $146.72. In fact, Monday’s opening price was greater than Friday’s high price. That’s a sign of huge built-up buy orders while the market was closed over the weekend.
Everyone wanted a piece of Goldmans ahead of their 2nd quarter results. And as you can see from today’s chart, investors have been behind this stock for the past eight months. Goldman Sachs’ share price chart has been a one way train.
But we’re at a crossroads at $150, as marked by the horizontal line. This has been an important "support level" in the past. The price held above there several times throughout 2008... until the market-wide collapse in October last year.
Since the market bottomed in March, Goldmans has raced back up, but so far it’s stopped dead at $150. What was once support has turned into an important resistance level.
Can investors drive Goldmans through overhead resistance?
On the face of its results, Goldmans didn’t disappoint.
It reported $13.76 billion in net revenues for the second quarter. This was up from $9.42 billion during the same period last year. Total profit for April to June was $3.44 billion, its largest ever quarterly profit.
But 78% of those revenues came from its "Trading and Principal Investments" group. Investment banking - what Goldman used to do - actually experienced a 15% decline in year-over-year quarterly revenues. And the "Asset Management" business also saw a 28% decline in quarterly revenues compared to the same time last year.
And don’t forget that the last quarter has been a stellar quarter for the market in general. If the markets turn down, and there is less to be had from its principal investments, Goldman could just as easily lose its shine.
Either way, $150 remains a critical level for technical traders around the world. Don’t worry too much about intraday movements. Only if it closes above $150 does Goldman’s rally look sustainable.
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