Stock of the day: Goldman Sachs

The main stars of yesterday’s session were Microsoft and Activision Blizzard following the acquisition which you’ve probably heard about. There were stocks though, which moved a bit in the shadow but their move was very important from a technical point of view. One of those stocks was Goldman Sachs. I mean the movements didn’t happen without reason. Goldman Sachs (GS) missed its quarterly profit expectations and that caused a lot of disappointment on Wall Street.

We analysed GS at the beginning of December and back then, we were negative, saying:

“On Goldman Sachs’s chart, we can see a few negative factors, so in this case, our view is bearish. The most important point here is that the price broke a crucial dynamic support on the lower black line. “

Now we know that back then the price was just finishing the head of the Head and Shoulder formation (yellow). Later, it managed to draw a small right shoulder and yesterday’s drop was a very handsome breakout of the neckline (green). That breakout confirms the sell signal in the mid-term.

What happens now after this bearish gap is that traders will most probably try to pull the price higher to close this gap. This commonly happens and we shouldn’t be surprised if it does. In the mid-term, sentiment remains negative, but in the short-term, some kind of an upswing can be seen on the horizon.

The negative sentiment stays with us, as long as the price stays below the neckline. Chances for the comeback above exist but they are really small at this moment.