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Shares of Goldman Sachs (NYSE:GS) have greatly underperformed the market, since reaching its peak back in October. Goldman’s technical indicators have been weak ever since, with all of its major moving averages developing a negative trend. This is why last Thursday and today’s price action is really important for the financial sector, as Goldman appears to be waking up, gaining strong momentum. Goldman based in a very tight range near the 200 day exponential moving average, and last Friday broke its short term downtrend being defined by the 20 day moving average. Today, Goldman stock price confirmed the move with a big momentum spike breaking the 50 day moving average, effectively breaking the medium term downtrend. The short term measured move for Goldman is to reach a target around $180, although it can charge higher if an earnings momentum run develops. The move in Goldman will certainly be helping the entire financial sector that has been lagging the S&P 500 for the last 3 months, and today’s action confirms that Goldman might be the leader of the pack as Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC) are moving higher. Morgan Stanley’s chart is not as compelling as Goldman, as it still needs to break the 50 day moving average, however it gapped considerably higher and it is breaking its downtrend. Bank of America after a tight downtrend it’s on the verge of breaking both the 20 and 50 day moving averages, which should spark a big momentum move. |
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The technology sector led the gains with Apple (NASDAQ:AAPL) stock, once again shinning. After struggling for weeks below the $200 level. The tech giant moved pass previuos resistance and posted new all time highs, today the maker of iPods and Macs helped the technology sector to post the most gains among the 10 key S&P 500 sectors. Apple (NASDAQ:AAPL) received a bullish note from an analyst at Kaufman, which raised its target price for the stock to $253. The analyst cited that the company could have sold a record number of iPods in this quarter.
With mounting speculation that Apple will unveil its long awaited tablet PC "iPad" on January 26th, the stock is poised to benefit from momentum traders that will surely push the stock higher in anticipation of the new product release. Clearly the stock is shinning again. |
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Apple Breaking above $200, Is this time for real? |
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Shares of Apple (NASDAQ:AAPL) were trading fractionally higher in the early trading session, by actually pushing just a tad above $200 before rolling over once again, failing to hold a strong momentum move above $200. Despite its recent weakness shares of Apple have been able to hold support above the 50 day moving average; however the stock has been unable to break free out of the cycle of low momentum. Apple’s stock price entered a drifting dynamic as momentum buyers don’t want to touch the stock until it breaks the short term downtrend and value investors don’t want to enter because they feel they can get it lower, resulting in a down drift and overall profit taking cycle. Considering the thinly traded holiday season it will be hard to find a momentum buyers to give Apple an above average volume breakout, therefore we might see a trade only of Apple from $200 to $208. This because even if Apple breaks the $200, it will still need to deal with a big number of investors that bought above $200 after Apple’s two unsuccessful runs above $200. Investors have been patiently awaiting a new breakout and new record high, but it never materialized, and with the price of being erratic at best it’s difficult to project a new high in the near term. |
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Apple Trying to Break Free |
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Shares of Apple Inc (NASDAQ:AAPL) were trading fractionally higher, this morning as the overall market awaits the fed decision. Apple shares have been under pressure since reaching its peak back in September with unsuccessful re-test last October by failing to break $208 and make new highs. For the last few trading sessions Apple has been able to hold the 50 day moving average around the $195 level, however is evident that the stock is entering a dormant period where momentum buyers will not come in until it breaks a significant level, and value investors still continue to believe that the stock can be bought at a lower price. This past week had two analyst notes providing some boost to Apple’s stock price, the first one was early in the week and didn’t help Apple shares. The second analyst note came from Oppenheimer last Wednesday that stated that the release of Apple’s notebook was expected to be a game changer in the space, something similar to what happen when the IPhone was released. None of these analyst comments were able to break the cycle in Apple. |
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Short Squeeze Developing in Palm? |
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With more than 33% of its stock sold short, traders are wondering if there is a Short Squeeze developing in the share price of Palm Inc (NASDAQ:PALM). Investors sell a stock short, when they believe the stock will go down in price, which already did by moving from a peak of $18 to its current price of $11.68, more than 35% decline in just a few weeks. Given that more than 33% of the stock has been sold short, at some point traders on the short side will have to cover or buy the stock to book some profits. A short Squeeze develops when there is a sudden demand for the stock given that it breaks technical levels or because of some positive news. In Palm’s case is difficult to say where this trigger will happen, but looking at the chart we can see that the stock has had difficulty going lower than $11, meaning buyers are willing to buy Palm shares below $11, and support or basing starts to develop, meaning no more downside for Palm. Sales of Palm Pre failed to meet analyst expectations, causing a big sell-off in the stock, however now that the storm of downgrades have passed, we might start seeing some analysts move to neutral sparking some of the short covering. |
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