GS: Shock And Awe To The Upside

From yesterday morning on GS:

"The measured move for the H&S Top went IN PLAY on the upside (add the points to the high of The Head) , as did the measured move off the Symmetrical Triangle breakout.

In addition to the Nested Symmetrical Triangle breakout in the intraday chart, The Bears also were caught short a Bullish Inverse H&S breakout in the daily, which no doubt accounted for some of the afternoon rally as they got squeezed into the $106's."

Regardless of whatever news will be given attribution as "the reason" for yesterday's upside explosion in GS, technically, The Bears were caught horribly out of position at Wednesday's close, short the Nested Symmetrical Triangle breakout in this intraday chart (yellow arrow), and short the Bullish Inverse H&S breakout in the daily chart.

Market Lesson: "Thou shalt not short, or stay short, Nested pattern breakouts and/or multiple pattern breakouts." YEEKS!!!



Breakaway Gap Up openings out of solid patterns like the ones that The Bulls had established in both the intraday and daily charts of GS that we've been following tend to be a "Gap And Go" rather than a "Gap And Crap," the latter of which reverses, then fizzles.

I didn't think that I'd get a chance at playing GS since I had no intention of chasing the opening gambit to 115.29 in fast market conditions, but there was a nice four dollar pullback to the EMAs, so I bought 2,000 shares of GS at 111.29-111.32 (white arrow).

The open was 110.33. The low was 110.00. My entry long was predicated on the thesis that on a Breakaway Gap out of the patterns that The Bulls had established in GS, The Bears weren't going to be let out of their shorts very easily, and that the session low quite likely already was in. If my thesis had been wrong, I would have stopped the trade out below the 110.00 low.

I wanted at least a dollar out of the trade. More, if I could get a quick rebound to sell into, then reposition at a better price.




About an hour into the trade, GS was noodling around the EMAs, digesting the huge opening gain. That looked fine, but I decided to take my dollar gain, and look to get back in if GS sold off into the 111's again. No luck with that. GS sold off only to 112.00, then began a steady climb to a high of 117.53, showing The Bears no mercy. UGH.



If I ever wrote a textbook on technical analysis, this last month in GS would be a thick chapter, it includes so many elements, which we've discussed these last weeks.

Among the most salient features, in my view, are:

1. The Bullish Wolfe Wave 5 Fakeout/Breakdown to 84.27 on October 4 on a Bullish Reversal candle

2. The H&S Top Fakeout/Breakdown to 100.08 at the October 25 close, which became Data Point #4 for a large Symmetrical Triangle (seen in the first chart, above). That head fake to the downside had an effect very similar to the Bullish Wolfe Wave fakeout on October 4, putting the proverbial "everyone" wrong-footed on the misdirection.

3. The move from $84 through the Kumo, to $117, occurred when poor earnings were expected and were actually much worse than anticipated. In early to mid-October, anyone who correctly predicted the big earnings miss got severely punished if they played that prediction by shorting GS, which is one of many examples of why I ignore the fundamentals, and why I always say:

"The fundamentals aren't what matter. It's the market's REACTION to the fundamentals that matters."



Gain: $2,000