Chart Wars: Will Bank of America Or Goldman Sachs Fly Higher As Q3 Earnings Season Kicks Off?

Bank of America Corp BAC and Goldman Sachs Group, Inc GS gapped up to open Tuesday’s trading session after Goldman printed better-than-expected third-quarter financials.

For the quarter, Goldman reported earnings per share of $8.25 on revenues of $11.98 billion, which beat the consensus estimate for EPS of $7.71 on revenues of $11.43 billion.

The earnings season has kicked off with a banking boom, indicating soaring inflation and a series of steep interest rate hikes have yet to stifle the firms’ top and bottom lines.

Bank of America gapped up following its earning beat Monday and continued to surge on Tuesday, trading up about 3% for a combined increase of over 17% since the stock hit a low of $29.31 on Oct. 13.

Goldman Sachs reached a high of $324.48 Tuesday, and despite running into sellers at that level, the stock remains up about 10% since reaching an Oct. 13 low of $287.75.

From a technical standpoint, both banks look set to climb higher over the coming days, although both Bank of America and Goldman will need to retrace over the coming days to print a higher low and confirm a new uptrend.

It should be noted, however, that events affecting the general markets, negative or positive reactions to earnings prints and news headlines can quickly invalidate patterns and breakouts. As the saying goes, "the trend is your friend until it isn't" and any trader in a position should have a clear stop set in place and manage their risk versus reward.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Bank of America Chart: Bank of America negated its downtrend on Friday, when the stock printed a higher high of $32.63, which was above the Oct. 4 lower high of $32.52. On the daily timeframe, Bank of America hasn’t yet printed a higher low to confirm a new uptrend is in the works.

• When Bank of America eventually retraces more significantly, bullish traders and investors can watch for the stock to print a bullish reversal candlestick, such as a doji or hammer candlestick, near the lower range of a gap that exists between $32.63 and $32.87.
• Bearish traders will be watching for a bearish reversal candlestick, such as a doji or shooting start candlestick to print near the new highs. If Bank of America closes Tuesday’s trading session below the $35 mark, a bearish candle stick will print, which could signal a larger move to the downside is in the cards for Wednesday.
• Bank of America has resistance above at $35.72 and $37.79 and support below at $33.99 and $32.77.

The Goldman Sachs Chart: By midafternoon, Goldman had retraced to completely fill the lower gap and was bouncing back up from the lower range of the area. The stock ran into sellers when Goldman was unable to regain the 50-day simple moving average earlier in the trading session.

Like Bank of America, Goldman negated its most recent downtrend but hasn’t yet confirmed an uptrend. Bullish traders who aren’t already in a position can watch to see if the stock prints a bullish reversal candlestick on a larger retracement, above the $290 mark.

• Goldman has resistance above at $323.31 and $345 and support below at $304.86 and $292.31.

See Also: Goldman Plans Combining Investment Banking and Trading Units In Major Organizational Overhaul

Photos: Shutterstock