Goldman Sachs Group Appears Poised For More Upside Technically
Shares of Goldman Sachs have been back on the rise in recent weeks after a nearly textbook “abc” pullback in the first quarter of 2014.
Goldman Sachs Group (NYSE: GS) shares have been once again treating loyal shareholders well for the last several months after a corrective move early in 2014 following a huge upside year in 2013.
The company is no doubt taking advantage of rising stock prices and a “normal” flow of equity deals that have been hitting the street this year. Is “Granny Goldman” a good way to play the generally rising tide of the market?
The Bulls' View Of Goldman Sachs…
Those long or wanting to get long of Goldman Sachs point to the fact that the company is perfectly positioned to benefit from the strong equity market, strong investment banking deal flow, and continued heavy activity in the commodities and forex markets.
The key for them outside of the markets and deal pipeline remaining buoyant is for Goldman's proprietary trading desks to be right more often than they are wrong.
In terms of valuation, Goldman sports a price-to-book ratio of 1.14, a price-to-sales ratio of 2.42 and a PE to Growth ratio (PEG) of around 1.0 based on next year's earnings and revenue estimates. Goldman's balance sheet, like any other banking institution is heavily levered in this low interest rate environment.
With all of the global investment opportunities and the low cost of debt capital, Goldman's team is simply taking advantage of favorable opportunities.
Technically, the bulls note that Goldman is right on the verge of a breakout with plenty of clear skies above $184.13 resistance until the 2009 peak at $194.24 comes into play.
The Bearish Viewpoint Of Goldman…
The bears in the Goldman arena are quick to note that Goldman carries so much debt that things can easily go badly with the stock price with any hiccup in their revenue sources, including from the sometimes high-risk areas in which they trade.
A slowdown in the investment banking deal flow, some difficult trading conditions in any of the asset classes, another slowdown in real estate, and more are all potential problems that could create some major issues with Goldman's story.
Who Has The Edge: The Bulls Or The Bears?
Right now, despite all of the potential sources of problems, Goldman seems to be hitting on all cylinders as a company, and the stock is reflecting that. Just one more hurdle needs to be cleared at $184.13 and another 10 points will be added to the stock price in a hurry.
Technicians say it would be a great opportunity to buy Goldman should the stock pull back to around $160, likely coincident with a pullback in the broader market. They note that shorting Goldman would be pretty risky right now given the strong uptrends in the stock and the market.
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