A month ago InvestingHaven’s research team identified Goldman Sachs (GS) as a stock to closely watch during the ongoing stock market crash. Especially the 175 level was a make-or-break level, not only for Goldman Sachs but for overall stock markets. Today, Goldman Sachs sent a clear bullish signal to the rest of world. Is this the end of market turmoil, and the continuation of the grand stock bull market?
In our piece Goldman Sachs at make-or-break level we described how this stock had reached a critical zone, and “whatever happens from here will be of the highest importance.”
We said that a bearish case would start below 175 points: “Any sustained breakdown for minimum 5 consecutive trading days below 175 points will mark a breakdown, and will create more bearish energy, both for Goldman Sachs and the banking industry. If the price of Goldman Sachs reverses from here then we will see 221 as a first price target. That’s where important overhead resistance sits.”
Moreover, we followed up last week in our 5 stock tips on our 2019 watchlist referring again to Goldman Sachs, not just a banking stock but also a bellwether stock for financials and, arguably, all markets. We recommended readers to watch GS in conjunction with leading stock market indices, first and foremost the Russell 2000 but also long term charts like the Dow Jones Long Term Chart on 20 Years.
We did iterate that GS must close this month, as well as the coming months, above $176, if not markets may be in deep trouble.
It is no coincidence that we picked $176 as a critical price point. As per our 100 investing tips we attach an above average value to a limited number of price points. We call it our 1/99 rule: 1% of price points on a chart determine 99% of the importance.
For peace of mind investors should have a handful of price points that they track in the big picture market trend. Moreover, it is monthly closes that are important to determine dominant trends. This allows for more controlled investing decisions. This is what investors need in a world of information overload and social media.
Today, Goldman Sachs sent a clear signal to world stock markets. A major rally took place which brought its stock price from $179 to $197, a rise of 9%. This is very unusual for a stock that has a market cap of $66B at the time of writing.
We believe this may be a clear signal that the bull market may continue, and recent market turmoil may be coming to an end! We closely watch the monthly close of GS as well as the Russell 2000.