Goldman Sachs is trading at record highs around $330 a share. Increased market volatility helped the bank’s trading division save the day in 2020. Unlike most of its main competitors, GS actually earned a higher profit last year compared to 2019.
During the coronavirus selloff, Goldman Sachs stock dipped below $131 a share. Investors who took advantage of it last year are now sitting on a ~150% gain. Should they take their profits or keep holding? Let’s hear what Elliott Wave analysis has to say on the subject.
At first glance, things don’t look as good for the bulls as they did a year ago. The surge from $131 to $336 can be seen as a five-wave impulse, labeled 1-2-3-4-5. Wave 1 is an expanding leading diagonal. According to the theory, a three-wave correction follows every impulse.
If this count is correct, Goldman Sachs stock can tumble ~20% to roughly $260 a share. The bearish RSI divergence between waves 3 and 5 supports the negative outlook. On the other hand, earnings estimates show GS is expected to make over $32 a share in 2022. If that is true, the stock would be a real bargain at $260.
Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!