Can Goldman Sachs Move Higher?

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With shares of Goldman Sachs (NYSE:GS) trading around $159, is GS an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Goldman Sachs is engaged in investment banking, securities, and investment management. It provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments, and high net worth individuals. The company operates in four segments: investment banking, institutional client services, investing and lending, and investment management. Through its segments, Goldman Sachs provides valuable investment services to consumers and companies worldwide.

Goldman Sachs Group Inc technology investment banker Anthony Noto, who helped orchestrate Twitter’s (NYSE:TWTR) successful IPO in November, is leaving and joining Coatue Management, according to a source familiar with the matter. Goldman said in a memo to employees that Noto is leaving the firm but did not mention his move to the hedge fund. It is unclear what role Noto, who won plaudits from Wall Street and Silicon Valley for leading the messaging service’s low-profile but smooth coming-out party, will play at Coatue. The source confirmed that Noto is joining the fund on condition of anonymity. His contacts and experience were deemed key to netting the Twitter win for Goldman after Morgan Stanley (NYSE:MS) snagged the much larger but far more troubled Facebook (NASDAQ:FB) IPO in 2012. Noto’s departure from Goldman comes just as China’s Alibaba is preparing what could the world’s largest technology IPO later this year. Goldman is helping manage the debut, along with Citigroup (NYSE:C), Credit Suisse Group AG (NYSE:CS), Deutsche Bank AG (NYSE:DB), JPMorgan Chase & Co (NYSE:JPM) and Morgan Stanley.

T = Technicals on the Stock Chart are Mixed

Goldman Sachs stock has not made significant progress over the last couple of quarters. However, the stock is currently trending higher and looks set to continue this path. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Goldman Sachs is trading below its rising key averages which signal neutral to bearish price action in the near-term.

GS

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Goldman Sachs options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Goldman Sachs options

16.75%

0%

0%

What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

June Options

Steep

Average

July Options

Steep

Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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