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Goldman Sachs Stock: Heading Back to Highs on Earnings Beat?

Goldman Sachs stock is rallying on better-than-expected quarterly results. Here's how it can get to new highs now.

Shares of Goldman Sachs  (GS) - Get Goldman Sachs Group, Inc. (GS) Report are up on Friday after the investment bank reported earnings.

It’s been a busy week of earnings, with the major banks reporting over the last few days.

Leading up to the report by Goldman, Morgan Stanley  (MS) - Get Morgan Stanley (MS) Report reported strong quarterly results, which suggested that Goldman should do pretty well, too.

That led to the blowout results by Goldman Sachs.

The bank reported earnings of $14.93 a share, up 55% year over year and ahead of estimates calling for earnings of $10.11 a share. Revenue of $13.61 billion beat expectations of $11.67 billion.

The strong results should give bulls confidence early in the fourth quarter, as the stock turns higher and looks to make a strong push into year-end.

Can Goldman Sachs hit all-time highs after the report?

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Trading Goldman Sachs Stock

Daily chart of Goldman Sachs stock.

Daily chart of Goldman Sachs stock.

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First, I love trading stocks from the long side that are doing well on the fundamental front. With a report like its current one, Goldman Sachs is clearly operating at a high level.

Next and more important, I love stocks that are trading well and above key levels.

For Goldman Sachs stock, it reclaimed the 10-day and 21-day moving averages on Thursday following the solid results from its peers. 

But it remained below the 50-day moving average and downtrend resistance (blue line).

The stock then reclaimed those two levels on Friday after its own earnings report, along with giving bulls a weekly-up rotation.

From here, I want to see Goldman Sachs stay above the 50-day moving average and Friday’s low. Below Friday's low and we could see a gap-fill down to $393.66 and/or a test of the 10-day moving average.

On the upside, let’s see if the shares can clear the October high, currently at $404.21. Above that opens the door to the $417 resistance mark and the all-time high up at $420.76.

Should shares clear the all-time high and start making new highs, keep an eye on the 261.8% extension, up near $444. 

That could be a possible upside target should Goldman Sachs gain momentum through the quarter.