Pre-Market Analysis - GS 7/1

Daily Chart



I see a Bullish HIDDEN Divergence for the 2-day period 29-30 Jun, which I interpret as a possibility that the downtrend (pink channel) is ending

To help me visualize where GS could go, I've drawn an uptrend channel (dotted lines in green). I'm thinking that today could either be another day with a close that's not far off from the open (ie. GS' consolidating), or, a mildly bullish day with GS trading up and within my green channel.

As far as sentiments among the financial sector are concerned, nothing much has changed ie they aren't good. But I was telling D last night that because sentiments are so negative, contrarians will probably start going long, so will those who have been waiting to scoop up fair-value stocks especially if they think that financials have bottomed out. The industry is currently being monitored rather closely by regulators and several changes in policies have been imposed on them; some have taken the initiative to do something ie. reviewing corporate governance rules. All these at first glance seem to be taking the wind out of the industry's sails, but could just prove effective in winning back some investors confidence

Yesterday's very choppy session with relatively long bullish and bearish candles tells me that the views on financials are quite polarized now, mirroring those of the market in general.

So I'm going to shut up now and suggest that as scalpers, we make sure to watch our technicals, keep the news on (briefing.com is a blessing), always wait for price confirmation before even considering an entry, then check to see if indicators are telling consistent stories, and use at least 2 time-frames for entry and monitoring of our positions.

Also, watch the indices. Although sometimes i wonder which is leading which (market leading or individual stocks leading), and GS has this habit of not trending with the market, i still think it's a good practice to keep tabs on the movement of the major indices. For those who find it easier to look at changes in absolute value rather than percentage, simply enter the index's symbol on your trading window like this: