GS Update

GS is a core short position, one that has a little room to add (as far as the position size I've built recently).

I looked at GS this morning and considering it's a non-leveraged, equity short, it has a solid gain and I considered taking some profits here to add GS back during a bounce at higher prices, but I remember the last time I tried to get too fancy trading core positions around small bounces and/or pullbacks and gave up fantastic AAPL short positioning as AAPL plunged from it's all time top to a -45% loss. I think it's probably good advice to plan your trade, but better to trade your plan.

After a quick look this morning on GS's weakness I washed the foolishness away and remembered that this is a long term core position, not a trading position. Here are some of the charts I looked at this morning and they reminded me of a few things:

1) We didn't touch GS short for most of this year even though a lot of members asked about it daily, we were patient

2) GS is in one of the best head fake positions right now to enter short; so why would I cover a short when GS is finally in shorting position for the year and at an area in which we couldn't ask for a better set up?

 This is this morning's intraday chart that not only confirmed the weakness this morning, but shows that it was coming as 3C has been leading negative through all of Friday afternoon.

 The 5 min chart suggests a bounce in GS and this is why I considered covering to open at better prices, but with the big picture in GS, this bounce is almost non-existient and really is no reason to try to trade around anything in GS with a profitable short already in place.

The 15 min chart shows the last leg in GS from accumulation in to early July lows to distribution at the price highs.

Many of you have asked weekly, sometimes daily about a GS short and we have stayed away from it for most of the year as it just was not set up as a high probability trade at that point. Having patience and letting the trade come to you are the tactics and signs of a "Wolf-like" trader, stalking it's prey and going in for the kill at the most opportune time rather than chasing anything that moves.

 This is the big picture in GS, it has been choppy, but there's a clear, large triangle and we just talked about large triangles and what they represent late last week, in this case, most often a clear top.

The area in yellow is also something we covered, "THE HEAD FAKE MOVE THAT PRECEDES THE DOWNSIDE REVERSAL". 

While the head fake move in GS would seem to be taking quite a long time, as I have been trying to press as a market CONCEPT, these moves are proportional to the price pattern or trading action. 

In this case a 1 month head fake would not be proportional at all, it's not about Wall Street creating pretty charts that are in scale like an artist's painting, it's about the character of the individual stock's circumstances and how long it takes smart money to move from a new long exposure to net short considering they are trading 10's of billions in GS alone (EACH!), not our typical 100 share lots.

 Money Stream in GS has confirmed the triangle as a bearish top and the move above the triangle which is not at all a technical analysis concept with a triangle this big, but technical traders treat all triangles the same, is in fact a head fake move that has been sold and shorted in to.

The daily 3C shows the same with some more detail.

A closer view...

This is the breakout above the triangle, for most of this year, every time I was asked about GS as a short I said, "Not yet, but it will be".

Clearly the daily negative divergence has transitioned this year from in line to slightly negative to leading negative and this being the right area to be entering shorts in GS.

As a larger general concept, I think a GS short for a longer term trending position can be entered anywhere in this area, but we still look for the best tactical entries, that's why our GS short is in a profitable position even with recent upside moves.

I like GS as a short "Hold", Add to or a new short position for those looking for Financial short exposure.