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Goldman Sachs - Are Banks The Next Dumpster?

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Goldman Sachs is another one of those stocks that's traded like a can of dog food for a very long period of time that the masses are really drawn to, much like Target, Disney, and Paypal, of which you can find calls for that I've made in the linked section below.

GS is relatively significant in that it's one of the 30 components of the Dow, which is one of the big three indexes.

The Dow had previously been the leader in strength, and for a long time, but in the last several weeks has become the leader in weakness.

Although it looks like a minor blip on the radar, I feel it's something of a harbinger of doom.

And the problem for Goldman Sachs can be seen clearly on the monthly:

Clearly insofar that the bounce from the 2018 high should have lead to new highs.

Instead, the distribution block from the market highs served as resistance. 14 months later, it took out July's low and we can now safely theorize that lower prices are in order.

Weekly bars show us that a failure swing has formed and July's price action was just a local stop raid.

So, what could a catalyst be? Arguably, there doesn't need to be a catalyst. It's just that JP Morgan is long 15,800 puts with a strike of SPX 4,225 expiring September 29 that have never been in the money since they were purchased at the end of Q2.

And so when one index falls, all indexes falls, and the arbitrage algorithms naturally take component stocks down with them.

There's also the economic disaster China under Xi Jinping and his Chinese Communist Party are facing. When you have a disaster hit the world's "Central Kingdom," nobody is an island and those macro equity flows will cause significant turmoil in other markets.

For the U.S. market makers, this simply represents an opportunity to kill longs, buy everyone's losses at the bottom, and rip it back to new highs while you short sell and chase the entire way because Reddit and Discord and Xeeeeeter told you to.

But "the best laid plans of mice and men often go awry."

What looms over the head of humanity is the CCP's 24-year persecution of Falun Dafa's 100 million practitioners in Mainland China, which was launched by former Chairman Jiang Zemin on July 20, 1999.

Although Jiang is dead now, the persecution still continues. Xi hasn't been a part of the persecution. Xi, to the contrary, has been killing the participants of the persecution in his "Anti-Corruption Campaign."

But much of the world has gone to Shanghai to do business with the Jiang Faction and that requires swearing vows to the Red Cult's Flag of Blood and leaving collateral.

This is going to be a roadblock to the future for the U.S. "systemically important banks" that cannot be passed, and the impact is going to be significant.

So, here's the trade on Goldman Sachs.

The target the algorithm is set up to pursue is definitely $275. Shorting from $320 actually really isn't that bad. Getting $45 on a put will do rather well for you even if you can only afford one.

Although optimal entry was definitely the 350s.

But the truth is that you aren't likely to be able to long $274 profitably. I'd say the first place you can look for a reversal or a meaningful bounce is $223.

Humans won't believe it until they see it. But once you see it, it's too late.

It only counts if you do something for yourself while the cards are still face down.

Just like poker, the river is coming, and there won't be any "running it twice."

註釋

Goldman giving flat bottoms to take out later is certainly nice of the market makers.

You always have to ask yourself when you see potential reversal patterns if it's rational for the most recent low to have been the target.

That's what threw everyone for a loop when Meta and Tesla dumped so hard. Every reversal was a fake out until it found the actual level the algorithm was targeting.