Will Goldman Sachs Continue The Bank Earnings Party On Wall Street?

Earnings season in the banking industry kicked off last week, as big banks started reporting their financials for the second quarter. JPMorgan Chase & Co. triggered the season with a better-than-expected earnings results on Thursday (14/7), thanks to better credit quality and low operating expenses. Right after the encouraging release of JPMorgan’s earnings report, investors seem optimistic that other large-cap banks and financial institutions, including the Goldman Sachs Group, shall follow the positive tone of JPMorgan.

Markets are paying much attention to Goldman Sachs’ second quarter earnings due to be released before the market open today. During Q116, the New York-based bank posted revenues of $6.34 billion. The bank’s earnings per share for Q2 are estimated to come in at $3.05, edging up 9.3% from the figure of $2.79 for the first-quarter of 2016.

Despite the turbulence in financial markets, with low oil prices, a low interest rates environment, the shocking Brexit vote, and re-emerging signs of an economic slowdown, the investment bank seems to be in good shape,having passed the Fed’s stress test requirements.

Investors remain positive regarding the acquisition by the investment bank in partnership with Bain Capital to acquire a majority stake in cosmetics maker Carver Korea. According to the country’s Ministry of Food and Drug Safety, Korea’s cosmetics exports grew 44% from the previous year to $2.59 billion in 2015 due to growing overseas popularity of “K-beauty” products. Following that, in case the acquisition is completed successfully, it is expected to lift the bank’s revenues and profits significantly.


Fig. Goldman Sachs Group D1 Technical Chart

On the daily chart, the stock is following a solid uptrend, and is currently trading at 163.23. ADX (14) has rocketed to 44.7592, consolidating the bullish trend.  Additionally, RSI (14) has edged up to 67.1422, suggesting that bulls will continue to take the lead. The trend indicator also confirms a concrete bull flag. The level 38.2% of Fibonacci retracement is anticipated to be tested.

Trade suggestion

Buy stop at 163.54, Take profit at 165.43, Stop loss at 162.10

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