Goldman technical – fundamental outlook

On the left hand, the daily Goldman chart. As I stated earlier, the 130s are a sell area and the 140 resistance turned out to be a valid one – we are heading for 80 basically even lower probably. After wave 3 down, we had a strong wave 4 bounce and entered wave 5, although alternatively we could have entered a period of zigzag sideways correction between 105 and 140 building a triangle pattern before wave 5 comes into motion. In any case, the fair value is more around last quarters earnings of $1.81 per share. Basic income sources have dried up and some have vanished in investment banking. As they are a bank now, the regulations will be more rigid and the leverage they can use diminished. I do not think they can earn more than $8-9 per year going forward unless they do not steal money from the TARF program. So even if one gives them 10 times earnings, which will be high going forward although compared to Wells Fargo and JPM its very low, they need to spend money on acquisitions, which will dilute earnings, since they may have to spend value for lesser income generating deposit biased bank.

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~ by behindthematrix on October 7, 2008.

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