Short Trade Idea
Enter your short position between $917.05 (Friday’s intra-day low) and $937.19 (Friday’s intra-day high).
Market Index Analysis
- Goldman Sachs (GS) is a member of the Dow Jones Industrial Average, the S&P 100, and the S&P 500 indices.
- All three indices trade off their highs with rising bearish trading volumes.
- The Bull Bear Power Indicator of the S&P 500 turned positive but remains below its descending trendline.
Market Sentiment Analysis
Equity futures are pointing lower this morning, following two weeks of losses, ahead of the busiest week of earnings season. Gold surged past $5,000 per ounce as geopolitical tensions and economic issues continue to rise. On the earnings front, Microsoft, Meta, Tesla, and Apple will dominate headlines later this week. The US Fed is expected to keep interest rates on hold this week, but markets will focus on its outlook and more details about the next Fed Chair, with BlackRock’s Rick Rieder rumored to be a favorite.
Goldman Sachs Fundamental Analysis
Goldman Sachs is a multinational investment bank and financial services company. It ranks as the largest investment bank globally by revenue. The Financial Stability Board considers GS a systemically important financial institution.
So, why am I bearish on GS following its post-earnings breakdown?
The revenue disappointment stood out to me, and I see less growth ahead as risks for an equity market correction loom. The return on assets of 0.94% remains insulting to investors, its concentration on the AI trend is another concern, and I am also bearish on its negative earnings-per-share growth. The average 5-year PEG ratio also confirms that the share price is extremely overvalued.
Metric | Value | Verdict |
P/E Ratio | 17.89 | Bearish |
P/B Ratio | 2.20 | Bullish |
PEG Ratio | 11.28 | Bearish |
Current Ratio | 1.66 | Bearish |
ROIC-WACC Ratio | Negative | Bearish |
The price-to-earning (P/E) ratio of 17.89 makes GS an expensive stock in its industry, but inexpensive compared to the S&P 500. By comparison, the P/E ratio for the S&P 500 is 31.23.
The average analyst price target for GS is $930.80. This suggests negligible upside potential, while downside risks continue to increase.
Goldman Sachs Technical Analysis
Today’s GS Signal
- The GS D1 chart shows price action breaking down below its horizontal resistance zone.
- It also shows price action between its ascending 0.0% and 38.2% Fibonacci Retracement Fan levels.
- The Bull Bear Power Indicator turned bearish with a descending trendline.
- The average bearish trading volumes are higher than the average bullish trading volumes.
- GS corrected with the S&P 500 Index, a bearish confirmation.
My GS Short Stock Trade
- GS Entry Level: Between $917.05 and $937.19
- GS Take Profit: Between $805.26 and $816.00
- GS Stop Loss: Between $970.95 and $984.70
- Risk/Reward Ratio: 2.07
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