In his first Executive Decision segment of his Wednesday "Mad Money" program, host Jim Cramer sat down with David Solomon, chairman and CEO of investment banker Goldman Sachs Group (GS) .
Solomon said Goldman's strategy includes strengthening its core businesses of capital markets, investment banking and trading, all of which have expanded meaningfully over the past year. Its strategy also involves investing in four areas of growth, one of which is its digital consumer platform. That platform, which includes partnerships with Apple (AAPL) and General Motors (GM) , has over 10 million customers and has brought in $100 billion in deposits to Goldman.
Let's check out the charts and indicators of Goldman.
In this daily bar chart of GS, below, we can see that prices have been rolling over and weakening the past nine months. This is a significant top and typically means we are going to see a significant decline in the months ahead. Prices have gapped below the cresting 200-day moving average line for a math-driven sell signal. The slope of the 50-day moving average line is negative and it crossed below the 200-day line in late January for a dead or death cross sell signal. The On-Balance-Volume (OBV) line has been in a decline from early June and tells me that sellers of GS have been more aggressive than buyers for the past nine months -- plenty of time to liquidate (sell) a large long position. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of GS, below, we see a bearish picture. Prices gapped below the now-declining 40-week moving average line so bulls have no technical reason to defend their positions. The weekly OBV line has been weak since August. The MACD oscillator has been in a long decline and recently crossed below the zero line.
In this daily Point and Figure chart of GS, below, we used close-only price data. Here the software suggests that the $281 area is a potential downside price target.
In this weekly Point and Figure chart of GS, below, we see a possible target in the $241 area.
Bottom line strategy: In my Jan. 18 review of Goldman Sachs I told subscribers, "GS is anticipated to gap lower Tuesday and extend those losses. I do not consider this weakness a buying opportunity and longs should exit. Avoid the long side." GS is likely to gap lower Thursday and the Point and Figure charts tell us to continue to avoid the long side.
