2 Goldman Sachs Charts This Pro Is Watching

Eagle Bay Capital Founder and Market Technician JC Parets highlighted two charts on Goldman Sachs Group Inc GS in his firm’s recent Dow 30 report.

Examining the weekly chart, Parets thought Goldman was “still in a nice uptrend but right near key resistance from the 2009 highs.”

According to the analysts, momentum was “doing its best to break” the downtrend line in the above chart.

Furthermore, the flat 200-week moving average and two-year downtrend in relative strength, the risk/reward had not favored the bullish traders for sometime, Parets indicated.

“I'd be a much better buyer down in the low 140s where we find the uptrend line from the 2009 lows and 200 week moving average or above all over this overhead supply from the 2009 highs. It is hard to be a buyer up here in the face of all of this overhead supply but see little reason to be aggressively short just yet,” Parets wrote.

Looking at the weekly chart, Parets felt that it was better to approach it from a tactical perspective and suggested that “a sustained breakout above the 2009 highs would be very bullish and would give us a target of 250 based on the 2007 highs.”

Looking at the daily chart on Goldman Sachs, Parets “wanted to be be long only above last January's highs shaded in gray.”

“As we've been pointing out the last couple of months, based on the weekly time frame the upside has seemed very limited, which is why we incorporate multiple timeframes. Below this shaded area, January highs, a more neutral stance is appropriate,” according to the report.

Eagle Bay had previously indicated that “a bullish development would be for prices to hold above the October highs,” however, they did not hold.

Confirmation of the bearish momentum divergence came when the stock broke the uptrend line from the Spring lows.

“I haven't liked this at all after breaking the uptrend line and former resistance from last January, especially with momentum now in a bearish range hitting oversold conditions on this sell-off,” Parets told traders.

Eagle Bay remained neutral due to the “failed at resistance from this broken uptrend line from the spring and 161.8 percent Fibonacci extension of the Spring 2014 correction.”