Goldman Sachs Group Inc (GS)

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Did GS Just Come Back to Life Again?
By: Julius de Kempenaer | April 9, 2020

* (Click Read Full Story »»» at the bottom of the page for the charts to appear on the post)



$248.94 ... That was the high for GS, set on Jan 17/2020. Two months later, on Mar 19/2020 a low was reached at $ 130.85. The stock almost halved... So now what?

On the (weekly) RRG for US sectors, Financials is travelling well inside the lagging quadrant and pushing further into it. The daily RRG shows XLF inside improving at flat RS-Momentum which makes it doubtful if the leading quadrant can be reached. In short, the Financials sector is not the best to invest in at the moment (pun intended).

Zooming in on the daily rotation for the individual members of the Financials sector against XLF, GS triggers the attention.



Over the last 20-30 trading days GS rotated from improving into leading but immediately rolled over and moved from leading straight into weakening, without touching the weakening quadrant. In there the tail stalled and remained static with the day-to-day observations clustered close together.

Since two days GS started to accelerate out of that cluster and is now hitting the leading quadrant again which suggests an outperformance going forward.

The price chart at the top of this article shows the daily bars for GS with relative strength against XLF and two panes with RRG-Lines. The first one shows the RRG-Lines vs XLF and the second pane shows the RRG-Lines vs SPY.

The RRG-Lines vs XLF correspond with the position of GS on the daily RRG printed above. The RRG-Lines vs SPY position GS inside the improving quadrant and travelling at a positive RRG-Heading but not yet inside the leading quadrant.

The most interesting part of the market structure since the low (1) was set is the fact that the second low (3) came in at a higher level than. This indicates that buyers came in more aggressively than on March 19. Breaking above the in-between high (2) with a follow through today, in the basis, signals that a new up-trend (higher highs and higher lows) is underway.

Obviously there is plenty of resistance, coming from former lows, on the way up but the worst seems to be over, at least for the time being.

For short-term traders this could be a nice setup, especially when price dips back into the $ 170-175 support zone. Another option would be to hedge a long position in GS with a short in XLF or SPY to mitigate sector or market risk.

#Staysafe

--Julius

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