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GS - Goldman Sachs Group Week Ended: 1/27/01
Price 114.69 P/E Ratio 19 52 Week High 133.63
Last Week + 2.19 Earnings Date 03/20/2001 52 Week Low 69.38
Picked At 117.88 Date Picked 1/24/01 Sector Financial
Current 114.69 Open 113.00 Change 1.13
Low 111.56 High 115.00 Volume 2,446,000

Company Description

The Goldman Sachs Group is a global investment banking and securities firm providing a range of services on a worldwide basis, including investment banking, trading and principal investments, and asset management and securities services. For the FY ended 11/00, revenues rose 31% to $33B. Net income rose 13% to $3.07B. Results reflect growth in investment banking and asset management activitiespartially offset by the absence of a $716M tax benefit.

Play Description

January 24, 2000

The AMEX Securities Broker/Dealer Index (XBD.X) is up over 32% since the end of November and Goldman Sachs has certainly been along for the ride. This move in the brokerage stocks makes sense since the Fed appears likely to slash rates yet another half point, creating a much more stable operating climate. Goldman Sachs makes most of its money from managed accounts. Management fee income grows when the underlying assets grow. For the year 2000, assets under management grew to $294 billion, up 14% from 1999. Goldman Sachs is also a major player in the IPO markets and if the stock market continues to stabilize, we could see a resurgence in this business. Earnings from the major broker/dealers have been strong, highlighted by Merrill Lynch's (NYSE:MER) stellar results announced earlier this week. Goldman Sachs will report their earnings on March 20th. The current trend line creates good support at $111.75. Major overhead resistance is likely to be found at $128.00, which gives us plenty of room to make a nice profit. The MACD offered a brief scare last week, but it appears to have resumed its upward course. OBV is very strong and is currently higher than when the stock was last making new price highs in September. Goldman Sachs is also a viable split candidate due to its lofty stock price. The company does not have any split history.

Picked on January 24th @ $117.88
Change since picked +0.00
Stop Loss @ $111.00


January 25, 2001

It was a tough start for this play as profit taking slashed prices across the board among financial stocks. The AMEX Securities Broker/Dealer Index (XBD) dropped 6.68 to 632.52. It should have been a good day for this group after Greenspan made strong comments in support of major tax cuts. Brokerage stocks should be a huge beneficiary of tax cuts, especially if the capital gains tax and/or inheritance taxes are cut. Perhaps we witnessed a bit of selling the news. Although Goldman Sachs does not report earnings until March, several of its competitors have already reported excellent results. Goldman Sachs is a viable split candidate due to its triple digit share price that is at levels that usually entices NYSE stocks to announce splits. Goldman closed near trendline support of $113.00 today. It is important that the stock stays above this price tomorrow or else the stock will be in danger of reversing its short-term trend. Despite today's decline, the MACD remains positive and the OBV is still near its highs. If GS can reverse course, look for mild resistance at $120.00.

Picked on January 24th @ $117.88
Change since picked -4.31
Stop Loss @ $111.00


Copyright 2001

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