Investors were expecting a more positive reaction to Goldman Sachs' report, particularly given the quarterly report and post-earnings rally they saw in JPMorgan (JPM) - Get JPMorgan Chase & Co. (JPM) Report on Friday. The hope was that Goldman Sachs stock could do the same.
Despite earnings of $5.71 per share coming in 69 cents per share or 13.7% ahead of estimates, investors are leery of a revenue figure that contracted more than 12.5% year-over-year and missed consensus expectations by $80 million. So far, though, the stock is holding up over its prior range. So let's look at the charts to get an idea of what could be next.
JPMorgan and Goldman Sachs are holdings in Jim Cramer's Action Alerts PLUS member club, whose analysts had this takeaway:
All in, while the results were mixed and shares are moving lower as a result, we believe the bank's overall performance to be supportive of current valuations with downside support coming from the increased tangible book value, and upside potential coming from continued expense reduction, a rebound in IPO/M&A activity, increased digital investments leading to improved operating efficiency (and accessibility for customers), and a successful launch of the Apple Card later this year leading to growth at Marcus, the bank's consumer business - which we expect to become a more material stream of revenue over time. We would of course also expect any resolution on the U.S./China trade front to provide an additional boost. ...
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Trading Goldman Sachs Stock
For Goldman Sachs stock, we are looking at a six-month daily chart (above) and a three-year weekly chart (below). Both highlight some of the longer-term trends and levels that are currently in play.
As you can see, Goldman Sachs' rally to the 200-day failed, as this mark is clearly acting as resistance even with Monday's earnings playing an obvious role in the stock's action. However, Goldman Sachs stock is still over prior range resistance near $200, as well as the 20-day and 50-day moving average.
Should it fall below range support, the 50-day will become the focus, with prior range support (blue line) near $188 also on watch. Should it hold over prior range resistance (black line), a retest of the 200-day is on the table.
When looking at the longer-term charts, we can see that this $208 to $210 level was previously a big support level for Goldman Sachs stock. So to see it now acting as resistance -- at least on the first test -- is no surprise.
Even though it pushed through the 200-week moving average last week, it's still clear that this mark is giving GS stock trouble, while the 50-week moving average is clear resistance.
On the plus side, a rally to $210+ could ignite a big-time breakout on multiple time frames for Goldman Sachs. Bulls would love to see the $200-ish area hold now, to make that breakout a possible outcome sooner than later. Below $200 and Goldman Sachs could be a choppy trade in the near term, while below $188 and I will have concerns for Goldman Sachs stock.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.