long GS, Goldman Sachs

For our first trade of 2012, we go long GS.

Based on a look at the stock's chart, we've reasons to believe support below $90 is strong and that a protracted upward move is due. If that happens, it'd almost certainly correspond with general equity markets worldwide moving higher.

We're currently hedged for market downside via shorts in gold, silver, and China, as well as via a levered long position in the U.S. dollar via UUP. We've got TBT, which usually goes up if the market does, but we could use another long position and that'll be Goldman Sachs which last traded at $94.53

We'll stop out on any close below $84 which is a level not seen since early 2009. The stock's worst closes in 2011 were $87.70 in December and $87.89 in November, so it'd take serious weakness to close below $84. The lowest intraday trade in 2011 was $84.27

We believe GS is due for a large and protracted move within the next few weeks, hopefully in our favor, but in case this becomes a long-term position that continues to generally move sideways as the stock has for months now, we note that based on the current price of the stock GS's quarterly $0.35 dividend equals roughly 1.5% per annum.

Wildcard : GS announces its earnings on January 18th, at which point things could get volatile for good or ill. This is another catalyst, perhaps "the" catalyst, for a big near-term move.



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