Trading the Banks Following Goldman Sachs News

HedgeFundLIVE.com — The last time Goldman Sachs (GS) got in trouble with the SEC was almost exactly one year ago on April 16, 2010.  How did GS along with the other U.S. banks trade on the day of and days following the negative news last April on Goldman?  The charts below show you how the bank names traded intraday.

GS:

GS SEC Case Chart

I will largely ignore the initial sell off, especially the degree of the move lower.  As Dean alluded to, last April was the first hit and the news was “newer.”  I really don’t expect the sell off to be this dramatic this time around.  But after the first down, there was a brief short covering.  Then the stock was weak into the close.  Note that the day the Goldman news came out last year was on a Friday.  The market had an entire weekend to digest the news, which I equate to the role of today’s overnight session.  GS saw a recovery on the day after and was on an uptrend for most of the day.  If I see a gap down tomorrow, for instance, I’d want to buy that dip.

JPM:

JPM SEC Case Chart

Similar move on the day of the news outbreak- sell off followed by short lived bounce, then weakness into the close.  On the following Monday, JPM sold off pretty aggressively off the open, but then saw a recovery into the close.  On the day after that (third day), JPM actually gapped up.

BAC:

BAC SEC Case Chart

Fairly similar to how JPM traded.  Weakness in first two days, then gap up on the third day.

MS:

MS SEC Case Chart

Certainly the least impacted financial institution by last year’s news, and rightfully so.

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http://www.hedgefundlive.com/blog/trading-the-banks-following-goldman-sachs-news

 

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