The Goldman Sachs Group (GS) was upgraded to "Buy" by TheStreet.com's quantitative service today. Naturally I looked at the charts and indicators to see what had changed. Let me show you.
In this daily bar chart of GS, below, we can see a punishing decline for the price of GS from last March to late December. Prices have recovered smartly the past six weeks including a gap to the upside last month.
The 50-day moving average line has bottomed.
The daily On-Balance-Volume (OBV) line has improved modestly and the MACD oscillator moved above the zero line for an outright buy signal. The MACD oscillator has narrowed and could soon cross to the downside but a rally in GS would probably reverse that possible signal.
In this weekly bar chart of GS, below, we can see room for further gains. The price pattern the past month or so looks like a bullish pennant pattern so we should look for an upside move to develop soon.
The declining 40-week moving average line intersects around $215.
The weekly OBV line has moved up from a December low but it needs further strength to establish an uptrend.
The MACD oscillator has given a cover shorts buy signal. An outright buy signal is likely to weeks in the future.
In this Point and Figure chart of GS, below, we can see the sharp recovery rally in GS without any price gap. An ambitious upside price target of $299 is being projected, but there is plenty of chart resistance between here and $299.
Bottom line strategy: With a quant "Buy" recommendation and some positive clues on the charts, we could see GS work higher with the $230 area the first price target.
(Goldman Sachs is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GS? Learn more now.)
