ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Earlier this week, I suggested setting up a pairs trade between Goldman Sachs (GS) and Deutsche Bank Ag (DB) to take advantage of an apparent growing divergence in performance between the two financial giants. My main recommendation rested on a put spread for GS and a call spread for DB. After thinking about the structure … Read more
When news broke of SEC charges of fraud against GS, investors quickly dumped DB out of fear that the SEC would soon target DB for its involvement in creating toxic collateralized debt obligations (CDOs). While the selling in GS has gained momentum, the selling in DB has ever so slightly reversed. On Monday, GS broke … Read more
I have a lot of respect for fund manager Doug Kass. His latest piece, “The Ramifications of the Goldman Sachs Case,” contextualizes the current push for financial reform, and it provides a succinct indictment of the practices that helped ignite the recent financial panic. However, I disagree with Kass’s casual link between the SEC’s charges … Read more
The news has rippled across the globe that the U.S. Securities Exchange Commission (SEC) finally got around to charging Goldman Sachs with fraud: “The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to … Read more
While Friday’s Dubai-related selling left the S&P 500 flat for the last two weeks, Goldman Sachs (GS) dropped almost 3% and punched a new low for November (see chart below). This new low now places GS in its first short-term downtrend since February/March, and it marks a serious failure from the 50DMA resistance. This downturn … Read more
Goldman Sachs (GS) has been a bellwether stock since the November lows. GS displayed relative strength when its March lows remained around 50% higher than the November lows. Since then, GS has followed a strong, upward trendline that led the general stock market before hitting its most recent peak in October. However, in November, the … Read more
Just thinking about writing this piece makes me cringe. After celebrating gold’s fresh 18-month highs yesterday, it occurred to me that I need to review my biggest whiff of this year: Goldman Sachs (GS), affectionately called “Government Sachs.” I could just as easily call this one “how I missed out on at least 900% returns.” … Read more