There is no doubt that GS has had a very nice move to the upside from the 11/21/08 low of $47.40 to the high that was put in place today at $145.50 , that is nearly a 300% move in six months. Can GS keep the stong momentum from this level to go another 60 points to the next major resistance level that was put in palce back on 5/02/08 at $203.00 or is it time GS will start to retreat back to the $100.00 level?
We wont know for sure until it starts to make it's move, but looking at the chart at this level the odds would seem to lean more towards correcting this 300% rally and come back down near the $100.00 level rather then extending up another 60 points from here. This will be a good indicator to the overall market holding here at 8,300 on the DOW or a move lower.
We are specifically watching a weekly close below the $133.90 level on GS. Even a daily close would trigger more selling in the stock as $133.90 would be taking out last weeks low. Today GS tested the high at $144.86 made back on 5/19/09 and buyers did NOT take out the highs with big buying pressure, we actually closed down $5.00 from the high of the day at $145.50 which was .60 cents higher than the high that was made on 5/19/09.
Maybe traders did buy the breakout but then quickly reversed there thinking and covered their longs as GS started to breakdown at the end of the day, but being that we could not take it out the highs of 5/19/09 and close above them makes us think that buyers will think twice before trying to play the breakout again if it occurs before we take out the $133.90 low.
Keep an eye on the $133.90 level on GS it might give you a heads up to which way the market is going to go if GS breaks this level before the ES breaks the 875.00 level.
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