This morning, Goldman Sachs reported very solid results on top of very tough comp's from last year, thus I'd have to say the quarter was a winner, but we'll have more on GS's results later.
Another financial stock that has gotten pounded of late is Moody's (MCO), the credit-rating agency and a long-time holding of Warren Buffett. The above chart shows the heavy selling and the drop to the 200-day moving neighborhood for MCO, with the critical aspect of the chart being that the selling and heavy distribution looks to be ending, thus the stock should be set for a bounce.
MCO reported 4th quarter '06 earnings in early February '07 that were much stronger than expected, driven by the tailwinds of tight corporate credit spreads, heavy bond issuance as a result of low nominal interest rates, a Fed that took their foot off the brakes, and - in general - healthy corporate balance sheets. However what worries me about the above chart is the potential double-top formation in the low $70's which was the point of the May '06 and the Feb '07 high, and the heavy volume on the recent drop.
MCO is getting washed out but it bears watching. The chart is telling us that there is potential here for the stock to be broken.
Long GS, MCO
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