First in foremost, if Goldman is dropping, so is JPM, BAC, C, and most importantly MS, who is trading near the low end of a channel pending a low volatility short term breakout. If the financial sector slips, it will be very difficult for the S&P 500, and DJI to maintain their record levels. While I don't mean to over simplify, there is an old saying, new record highs generally leads to new record highs. Should this be true, it is in fact a great time to buy the financial sector in general. Should the bull market maintain itself, the financial sector that ultimately drove some of the most pivotal pushes into new record territory should be seen currently as undervalued. If the S&P 500 make new highs tomorrow, or the day after, or the day following that, and so on, Goldman Sachs will make for one of the better dip buying positions. The financial sector will determine a substantial amount of direction, while I am not saying rush out and buy it right now, I am saying keep in mind the fact that Goldman is to the finance industry as Apple is to the tech industry. The fact that Buffett has supported both at one point raises the fact that APPL just pushed into new record highs today. At this time it is a bull market. New 52 week highs are consistently exceeding the 52 week lows. When we see 52 week lows consistently take control, for even a week or so, then we can have some concern. In the mean time, Goldman earnings are reported on July 18th. The most recent release was a miss compared to street estimate. But when you consider the fact that it is a bull market, it really doesn't matter. You can not make money being short throughout a bull market. The earnings miss was rare, it is priced in. Goldman headlines have been light. They are switching up management slightly. Nothing major, Llyod is still there, and hopefully staying healthy, we know he had to deal with some health issues. Goldman Sachs will be in excellent position to take advantage of higher interest rates, which they factor in as a reality, along with the recent headlines from Jamie Dimon, encouraging smaller banks to work together to fight any unraveling of quantitative easing. One thing that I have noticed about Goldman Sachs technically, over the past two years, any sell pressure over 1% has required generally a resting period of one day before seeing any vertical accumulation. The fact that shorts are trying to pin down this machine while indexes race to record highs warrants caution of a short term short squeeze should price push above the $230 level.
Disclosure: I am/we are long GS.
Additional disclosure: Long Call options.