Halftime Report: Goldman Chart Grows More Ominous
The Fast Money traders are closely watching the action in Goldman Sachs, which popped Thursday morning on better than expected earnings, but then slipped into negative territory.
Despite reporting $8.20 a share, well above the $5.20 a share expected by analysts, investors turned bearish on this stock and now at least one top technical analyst is suggesting the stock is making a head and shoulders pattern – a bearish signal.
How should you be trading now?
Instant Insights with the Fast Money traders
We now have a macro bearish head and shoulders top, explains Scott Redler of T3. The neckline has been pierced around $160. If it doesn’t bounce significantly, I’d short the stock down to $135.
If I owned Goldman I’d be concerned, says veteran trader Gary Kaminsky. Can you be comfortable owning this stock (or any other financial) with so many unknowns?
I have a $200 price target on Goldman, counters Eugene Profit of Profit Funds. Fundamentally the company looks strong, just look at their latest earnings. I’m a buyer on the weakness.
OBAMA PROPOSES NEW CURBS ON BANKS
Stocks fell on Thursday with financials leading the Dow lower. Negative sentiment in the market largely stemmed from a White House proposal to establish new limits on the size and trading practices of big banks.
On Thursday President Obama said he wanted to prevent a return to the "old practices" that led to the financial meltdown. "While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Obama said.
Investors worried the move would eat into profits at large trading firms like Goldman Sachs whose profits blew past forecasts today.
How should you be positioned?
Volatility and volume in financial stocks is exploding, explains OptionMonster Jon Najarian. That’s particularly true for JPMorgan , Morgan Stanley and Goldman. But if you don't already own protection, it’s too late to buy, he says. It’s like waiting to buy insurance when the hurricane hits; they’re going to charge you a lot of money.
At this point, the best defense is a good offense, says Guy Adami. I’d step on the accelerator on the short side. There’s nothing that suggests financials will make a meaningful bounce. Rallies should be sold into and short should be aggressive.
Looking at the market broadly, charts tell me the complexion of the market has changed, adds Scott Redler. The uptrend that’s been in tact since July has been broken in the S&P.
TAKE YOUR POSITION: GOOGLE
Google reports earnings after the bell on Thursday. Considering some investors are hoping this report turns the tide in the tech sector, how should you be positioned?
What’s the trade?
In Google, the uptrend is broken, says Scott Redler. Even if it’s a good report, I think investors will sell. I wouldn’t be long into this report.
I want to hear what’s going on with China, says Jon Najarian. And I too think the stock is vulnerable.
OPTIONS ACTION: POTASH
Jon Najarian has spotted unusual options action in Potash .
This name continues to see active buying of at and out of the money calls, he says. But I wouldn’t play the options naked; I’d only do it with spreads.
TRADE TO GO: BARRICK
Guy Adami suggests putting Barrick Gold on your radar. I think it trades down to $34.50, he says.
CALL THE CLOSE
Guy Adami: I’m pretty scared.
Jon Najarian: I’d sell into the close.
Eugene Profit: Sell into the close
Scott Redler: I’d be short into the close.
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Trader disclosure: On January 21st, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman Owns (AAPL); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (UNG), (USO); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (TGT); Pete Najarian Owns (BBT) Calls; Pete Najarian Owns (BP), Is Short (BP) Call; Pete Najarian Owns (GS) Call Spread; Pete Najarian Owns (INTC) Calls; Pete Najarian Owns (MS), Is Short (MS) Calls; Pete Najarian Owns (MRVL); Pete Najarian Owns (PFE); Pete Najarian Owns (XLF) Calls; Pete Najarian Owns (CLF) Call Spread; Pete Najarian Owns (TCK), Is Short (TCK) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU)’ Seymour Owns (FXI), (AAPL), (BAC), (GOOG), (INTC), (POT)
For Tim Seymour:
Seygem Asset Management Is Short (PBR)
Seygem Asset Management Is Short (FCX)
For Jon Najarian:
Jon Najarian Owns (GOOG) Put Spread
Jon Najarian Owns (POT) Call Spread
Jon Najarian Owns (GOOG)
For Brad Hintz:
Hintz Owns Morgan Stanley And Discover
Hintz Owns (CME)
Accounts Over Which Bernstein And/Or Affiliates Exercise Investmet Discretion Own More Than 1% Of (GS), (MS)
(GS), (MS) Are Or In Past 12 Months Were Clients Of Bernstein (Non-Investment Banking-Securities Related Services)
An Affiliate Of Bernstein Received Non-Investment Banking Compensation From (GS), (MS) (Securities Related Services)
For Richard Kugele:
Needham & Company Is A Market Maker In (STX)
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