Goldman: Bulls vs. Bears

The Bears took Goldman down early. On a Gap Down like that, I look at the 50% and 61.8% retracements, and also at any overhead resistance if I want to enter short.

The 50% retracement was 148.28. There was horizontal resistance at 148.54-.55, and then at 148.70-.75. Since Goldman was down as much as nearly $3, I put in my order to short it at 148.35, just above the 50% retracement, thinking that since the market was down pretty good, Goldman might not make it up to the horizontal resistance levels.

After I got filled, Goldman rallied almost to UNCH, at White #1, which was fine. It sold off to White #2, then rallied to White #3, almost to UNCH again. That wasn't fine. The SPX still was near its low on the session, and Morgan had gone GREEN. Bla-a-ah.

On the way down to White #4, I threw it in for a small gain. I didn't like the strength that Goldman was showing, and I was concerned that it might put in White Data Point #4, then take the pattern out out to the upside.

Shortly after I covered, Goldman broke the Symmetrical Triangle (in white) to the downside, putting a target of 146.74 IN PLAY, but I still didn't like the fact that Morgan still was doing well, and there's never any guarantee with these targets.

Math:

148.89 - High of the pattern
147.75 - Low of the pattern

148.89 - 147.75 = 1.14 points of downside from the point of the breakdown, at 147.88.

147.88 - 1.14 points = Target: 146.74 IN PLAY

As it turned out, the target got MADE within one penny. The low for the remainder of the session was in the Noon hour, at 146.75. Maybe we SHOULD start expecting exactitude from Ms. Market! LOL.

I also was playing IBM, so I didn't follow Goldman in the afternoon, but it put in a nice bullish pattern which included validated resistance, (yellow arrow) which we often discuss.

When there's a third "hit" to a trendline, Ms. Market clearly us telling us, "That IS resistance! (or support, if it's a lower trendline)." There's no "always" in the stock market, but when Ms. Market tells us that validated resistance no longer is resistance, that usually has some significance. If a pattern breakout is involved, the chances of the target getting MADE are improved because players can see both the breakout AND that validated resistance got taken out in the process.

The breakout of the Symmetrical Triangle (in yellow) put 148.89 IN PLAY.

147.99 - 146.75 = 1.24 points of upside on a breakout, which was at 147.65.

147.65 + 1.24 = Target: 148.89 IN PLAY

We can see that once Goldman broke out, it was "rip...rip...rip" to the upside! Some will call that "market manipulation," but let's not concern ourselves with such fears, and "play it as it lies." There certainly was technical justification for it, on the breakout of the Symmetrical Triangle. The 148.89 target got MADE, and Goldman went beyond it, into the $149's, before The Bears took it down into the close.

The Bears won the day since Goldman closed in the red, but we can see that yesterday's trading was illustrative of the Bull vs. Bear struggle that we've witnessed in the daily chart, in the current Rising Wedge. Both teams "got game," as it were.

Gain: $100. Not even worth mentioning, but I posted it as an example of "When in doubt...get out." While we don't want to be too jumpy in our trades (which I do tend to be), if the trade isn't going according to our expectations, it's fine to throw it in if we've got reason to suspect that the trade is about to go against us.