11/8 Thursday

Entered Bearish @ $119.06

Entered bearish this morning when it was kind of fizzling around that double top neckline.  What I wanted to watch out was a sharp bullish pull back. It happens sometimes after a huge bearish run so I was making sure it wasn’t going to break the double top neckline.   Sure enough after a while neckline held true and $GS started traveling below the double top neckline and that’s where I got in bearish.

Double Top at a major resistance is strong reversal signal.

We did fill the gap but did not push through it so I will be watching for that tomorrow morning and see if that’s going to slow it down.

My next target is at $106 and possibly lower but here is what I am worrying about.

I am thinking maybe it’s forming a grand scale double heads and shoulders pattern.

So if that’s the case, here is my game plan.

At $112 (which is the neckline of this potential double heads and shoulders pattern) if I see any slightest short-term bullish reversal signal, I will close out my bearish trade completely and wait till it forms a right shoulder.

And when it is done forming a right shoulder, I will get in bearish at the top of the right shoulder and ride it down to around $98 level.   But as of now, we do not know that it is going to form such pattern.

Nice breaking of moving averages here.

Up top we broke 10/20EMAs and in fact, they are also crossing which suggests bearish momentum coming in. Also we broke 50EMA.  If we continue bearish 200SMA (red) is coming up here at $110.  What we want to see next week is that 10EMA crossing 50EMA for continue of this bearish momentum.

11/11 Sunday

Bearish Divergences Confirmed

Very steep looking Bearish Divergences has been formed on here.

Take a look at the Stochastics.  You see that the third wave?  It didn’t even get to the divergence line.  That’s very very bearish because stock made higher highs but Stochastics failed miserably.

I am expecting some bearish move coming this week unless it wants to form this right shoulder of this potential double heads and shoulders pattern.  But from looking this Divergences, we definitely have bearish sentiments rolling in here.

11/14 Wednesday

Supports To Break This Week

Tanked today however unlike other financials, $GS hasn’t truly broken out yet because we still got those short-term supports (see arrows) waiting underneath.  This is where I am going to be concerned a little bit as I have mentioned on this earlier updates that we might be forming a right shoulder on this thing.  And if that’s the case, it’s not good.

So if this thing is going to bounce from here, we may bounce to $122 area and I definitely don’t want that and I am not going to follow that ride.  I will have to see the price action tomorrow and see if we have any kind of short-term reversals here.  If that’s the case, I will get out of this trade and wait until it forms the right shoulder, and get back in bearish when it starts to fall out of the right shoulder top.   For now though good day for the bears.

Volume has been increasing last three days which is a good thing.

If we can have another solid bearish day with good spike of volume that would crush those two supports, we probably don’t have to worry about forming that right shoulder.

11/24 Saturday

Forming The Right Shoulder? I Think So..

So I got stopped on Friday and pretty much broke even but I am watching it very closely to short again because as I have talked about on this earlier updates that we possibly forming a Head and Shoulders pattern. And I think that’s what is going to happen here.

My biggest reason is the declining volume and you might argue that because it was the holiday week and maybe so.  Regardless it was holiday or not, there weren’t much big buyers on this stock so I can’t interpret any other way except the fact that it was just a manipulation move.  Someone somewhere must understood that it could have that seasonal Thanksgiving holiday run up.  I mean who knows?  All I know is that chart tells us the health of it’s condition and I don’t see the strength.

I do believe we are going to slow down at around $121 area (to form that right shoulder). If we close with Doji or a spinning top candle on Monday, be cautious because this thing can roll over pretty fast after 2-3 days after.   I will be watching the financials pretty closely this week as I am expecting many or all of them to roll over.

Check out my $BAC analysis which I do deeper studies on the volume action and this stock has very similar pattern as $BAC.

11/28 Wednesday

(9:02am CT) Neckline Must Be Broken…

Gaped down this morning after forming the top of that right shoulder as we have anticipating.  Around $121 I got in with some Put Options and I think the timing was great on that entry.  Yesterday we did have some good volume spike which is good fuel for us as we continue this downtrend.

So first things first.   Head and Shoulders formation is only confirmed when the neckline is completely broken and you can see on this chart that we are headed towards to the neckline.   It will be very important how $GS deals with that neckline this week and next week. If can break through that neckline then H&S formation is confirmed, and we have rooms to go deeper.     If the H&S is confirmed, here is my ULTIMATE TARGET.  I say ultimate target because I might not even get there depending on the overall market condition and etc.

Ultimate Target

(Weekly Chart)

$100-$96 is my ultimate target on this trade. Why $100-$96 level?   Take a closer look at that weekly support coming up from last from Oct 2011.  That’s very strong support and I highly doubt we are going to break that.   So that’s going to be my ultimate target but then again depending on the road condition, I will get out of my Put Options on any given moment.   Also important thing is that if the neckline does not break and if we bounce?  I will be out of this thing quick.

12/7 Friday

I Am Out

Bears are losing steam… Been waiting too long. Got out of this trade.