GS for Loren

Loren is a Level 1 Student in our current Foundations of Stocks and Options class -- so for this analysis I'm going to try and stick to the tools that we've presented to them so far.

First, you'll obviously notice that GS has been in a nice little up-trend for the last 4 months -- nothing major, but we're slowly trading a $30 channel upward. GS is typically a wonderfully disciplined stock and this trend is no exception. Amidst intense turbulence in the financial sector, GS has maintained some semblance of order here!

With that said, you can clearly see that you're trading at the top of your channel right now which could indicate that a short retracement is imminent. More significantly is the fact that you are quickly approaching your 200 day Moving Average -- which we'll be talking about in a class very shortly. The 200 deserves a lot of respect.

Although many of the other indicators still show bullishness to the trade: Increasing Volume, neither Stochs, MACD RSI have crossed over, and you're riding the top Bollinger Band -- there just isn't enough room before the 200 to get me into a bullish trade here -- in fact, there isn't a lot of room after the 200 before you meet the next resistance point! This is a perfect storm for consolidation!

We'll talk more about bracket trading (trading neutral) in class #8 -- but in short you'd want to set up a bracket to enter a trade here. Your top bracket should be past the 200 (with solid confirmation), your bottom could be a little tighter -- I'd set it right at Friday's low to trigger a bearish trade.

Jump in here with your comments Loren!

See you Wednesday