Goldman Sachs Gaps Above Resistance Before Earnings

Big bank earnings are in focus today after an impressive report from JPMorgan Chase

Managing Editor
Apr 12, 2019 at 1:06 PM
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First-quarter earnings season kicked off on a high note today, thanks to strong results from financial JPMorgan Chase (JPM). Fellow blue-chip bank name Goldman Sachs Group Inc (NYSE:GS) is scheduled to report earnings this Monday, April 15, and will unveil its results before the opening bell. 

Looking at the charts, GS has added 24% year-to-date, one of the best Dow stocks so far. Today, the stock is up 1.9% at $206.71, breaking above resistance in the $205 neighborhood and its 160-day moving average, a trendline that hasn't been toppled on a daily closing basis in almost a year.

Daily GS Since April with 160MA

Moving onto GS' earnings history, the blue chip has closed lower the day after reporting in six of its past eight earnings, though the two most recent reactions have been positive. Over the past two years, the shares have swung an average of 3.3% the day after earnings, regardless of direction. This time around, the options market is pricing in a higher-than-usual 4.8% swing for Monday's trading. 

Meanwhile, Goldman Sachs stock's Schaeffer’s put/call open interest ratio (SOIR) of 1.08 sits in the 99th percentile of its annual range. In other words, this lofty percentile ranking suggests a bigger-than-usual put-skew among near-term options traders. 

While peak open interest is found at the deep out-of-the-money April 115 put -- and looks to be the result of speculators selling to open positions back in February -- other options traders have targeted the April 195 put. Speculators who bought these puts to open expect GS to fall below $195 by the close next Thursday, April 18, while put writers expect the strike to serve as floor through expiration.

Analysts have not been so keen on the bank giant. Currently, eight of the 13 firms following GS sport a tepid "hold" or "strong sell" recommendation, while the average 12-month price target of $230.43 is a roughly 11% premium to the stock's present trading levels.


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