On Thursday, traders on the floor were talking about Goldman Sachs as the victim of a vicious, aggressive and downright brutal Najarian slash-job.
In fact, some pros were absolutely stunned by the negative rhetoric - they know that both Jon and Pete Najarian are relatively optimistic about the recovery.
But this call didn’t come from any of the Fast traders – the chatter was triggered by Ed Najarian of ISI Group who downgraded the firm to ‘Hold’ from ‘Buy’ and reduced his price target to $135 from $153.
Specifically, the ISI analyst expects ‘very weak’ earnings through year’s end as well as ‘significant’ revisions to earnings expectations over the next month -- and by significant he means $0.75 - sharply less than his previous estimates of $2.50.
”Clearly he dumped his estimates pretty substantially,” muses our own Jon Najarian.
In fact on the floor of the NYSE some traders were shaking their heads in disbelief. “Goldman had that appearance where they could do no wrong a few years ago,” says Steve Grasso.
But times have changed. “Now they’ve become the poster child for everything bad about Wall Street.”
And that begs the question – how should you trade it?
Grasso thinks there’s probably more sell pressure for Goldman. If nothing more, he thinks the firm remains in the cross hairs of Washington lawmakers looking to lay blame.
Guy Adami, a former Goldman guy is on the other side. “I think Goldman had their capitulation day when the news broke that Lloyd Blankfein had retained an attorney,” he says. “The stock traded down to $105. Maybe it re-tests that level but I don’t think it will.” And even if it does, he doesn't expect it to break down.
Trader Steve Cortes agrees with Adami. “I think Najarian is wrong on this one,” he says. “If it gets closer to $110 I would be a very interested buyer. There’s a pall over the stock that I think is unfair. It’s still the smartest firm on the Street.”
* In the interest of full disclosure Ed Najarian of ISI Group is related to neither Jon nor Pete Najarian.
SEPTEMBER TO REMEMBER?
It’s hard to ignore that the calendar turned on Thursday with investors forced to confront a scary page, September – historically the worst month for stocks.
According to Bespoke, over the last 50 years September has been the worst month for equities.
What should you make of it?
Trader Guy Adami sees no reason this September will be unlike any other. He thinks rallies should be sold. Looking at technicals he’s watching 1230, a level he thinks will generate strong resistance.
“It’s basically the 50% correction level between the recent low put in a few weeks ago and the high of 1370 back in May. I fall in the camp that think we’ve rallied 100 points off the lows and traders should be fading,” he says
Trader Steve Grasso agrees entirely. Because the market tends to bounce at key levels, he’s convinced that technicals are driving market action. ‘You’d like to think fundamentals are driving the advance, but the truth is people are programming their computers based off numbers – that’s why technicals are so important.” And the market is quickly approaching 1230.
What do you think? We want to know!