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A Daily Look at the Two G's: Goldman and Google
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Goldman and Google - the Two "G's" have been showing upward strength recently into the new year. Let's take a quick chart view of the daily chart of both of these leading stocks for clues as to what to expect in them and perhaps the broader market.
Let's start first with the powerful Google (Nasdaq: GOOG):
Google's daily chart shows us the best example of a powerful, relentless, rising uptrend in price.
In general, when traders identify uptrends, the best strategies become buying simple pullbacks (retracements) into support zones, which often come from the rising 20 day EMA. Give a bit of room for a tiny slip under the average in terms of placing stops, or wait for price begins to rise after forming a reversal candle such as a doji or other bullish reversal candle.
As long as price continues to form higher swing highs and higher swing lows, then odds favor trend continuation... which means buying pullbacks tends to be a better 'general' strategy than trying to call a top in the stock.
In general, traders want to exit on a strong swing to new highs that breaks above the upper Bollinger Band as reversal candles - such as dojis - form. Then, a trader would wait to re-buy the stock on the next pullback.
For now, it looks like Google is preparing for a retracement back to the rising 20 EMA - currently at $607 - so it would be a lower-probability trade to buy here and now, even if Google continues higher. As long as price remains above the 20 EMA, odds favor higher prices yet to come as explained by the "Trend Continuity" principle.
With Goldman Sachs (NYSE: GS), the picture is slightly different - a bit less bullish. Let's take a look.
While Google is surging to fresh new highs, Goldman Sachs is roughly $15 below the prior swing high in October 2009.
Price is actually forming lower (daily) swing lows and swing highs - that's not quite the picture of bullish strength at this moment.
However, price is above both daily moving averages, and the most recent swing has formed a new momentum oscillator high (interesting).
I've drawn a Fibonacci retracement grid to identify potential resistance areas on the current swing high, and price - as of this moment - is forming a shooting star candle that failed to rise above the 50% retracement at $176.05.
As such, the buyers have to prove themselves by driving price above not only the 50% and 61.8% Fibonacci Retracement Grid ($176.05 and $179.80 respectively), but also above the $181 swing high formed in November.
Any break above $181 should lead to a rally back to challenge or even exceed the 2009 highs above $190 - that gives a trade set-up to expect for buyers.
Otherwise, the chart is under overhead resistance levels that we need to watch closely.
The 20 and 50 EMAs will soon form a bullish cross or confluence level at the $170 level, so the boundaries become clear for both buyers and sellers:
Long Bias above $181 to target $190.
Short Bias if price falls under $170 to target prior support at $160. Goldman would confirm a trend reversal if price broke the recent $160 lows.
Let's keep those levels in mind going forward!
Corey Rosenbloom, CMT
