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Cold Shoulder: Goldman Warns If 1,040 Is Taken Out In S&P, 865 Is Next Stop

Tyler Durden's picture


Here is why the entire Liberty 33 trading desk is set on preventing a break of 1,040 in the S&P - as Goldman's trading desk technician John Noyce warns, the next stop in the head and shoulders formation, should 1040 be taken out, would be 865, not to mention a complete rout for global teleprompter stocks post the mid-term elections.

From Goldman:

  • The S&P fails to sustain above the 200-dma with a clear risk of an H&S top forming…
  • Early last week the market moved above the 200-dma which argued for some ST stabilisation and the chances of a deeper retrace of the drop from the April highs.
  • The break however failed to yield any meaningful rally and the market has now moved back below the 200-dma on a close basis.
  • As discussed over recent weeks the underlying structure of the market has a negative setup and you can now also argue an H&S top is in the process of forming.
  • The interim low from 8th June and the neckline of that pattern are now converged; 1,042-1,040. This region
    also represents the first notable support below current levels.
  • If a break below the neckline of the pattern can be achieved as looks the risk on a multi-week basis the target would be 865.
  • Overall, the market structurally looks a sell on rallies with the MT-LT (multi-week/-month) risks on the downside.

Full Report


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Tue, 06/29/2010 - 12:36 | 441783 doolittlegeorge
doolittlegeorge's picture

yeeessss.  "If I can't have you than nobody can America."  Did someone just say "start shorting Goldman"?

Tue, 06/29/2010 - 12:59 | 441865 pan-the-ist
pan-the-ist's picture

My guess, the market is down today because finreg is still being debated and it will continue to be down until it is gutted. Then, almost magically, when the bill is passed and signed into law, the market will be back up as the MSM takes the collective eye off of reality and puts it back on unicorns and faeries.

*disclaimer* I am not invested and this is not sound financial advice.

Tue, 06/29/2010 - 16:06 | 442522 Pez
Pez's picture

PPT to save the day! Another day and they staved of the econ-terrorist, Goldman Sachs. Will the stockmarket periliously plunge to the depths of damnation? Will the US market lose it's glitter in young trader's eyes? Will librarian Nell who invested all her life savings in mutualfunds ever get to retire? Tune in tomorrow for another episode of: "Only the shadow government knows!!"

Wed, 06/30/2010 - 09:30 | 444008 pan-the-ist
pan-the-ist's picture

Very well done :)

Tue, 06/29/2010 - 13:06 | 441896 ATG
ATG's picture

Never fear - Abby's looking for a big one...

Tue, 06/29/2010 - 12:38 | 441790 Turd Ferguson
Turd Ferguson's picture

No shit. I wonder what the old hosebag, AbbyJC, thinks of this...

Tue, 06/29/2010 - 12:40 | 441795 Cognitive Dissonance
Cognitive Dissonance's picture

As it is spoken, let it be true.

Karma demands we re-visit 666, but that would be too good to be true. I'm loaded for bear and up to my neck in shorts. The trend has changed. The only question is when does this down trend end?

Tue, 06/29/2010 - 12:53 | 441844 LeBalance
LeBalance's picture

You are so right. Goldman speaks and so it shall manifest.

Tue, 06/29/2010 - 13:01 | 441875 nonclaim
nonclaim's picture

I read it as "if we can't save 1040 we'll drive it to 865" and they'll make another 100 million either way, everyday.

Tue, 06/29/2010 - 13:07 | 441899 ATG
ATG's picture

Maybe not this time.

Tue, 06/29/2010 - 16:42 | 442681 Testicular Cancer
Testicular Cancer's picture

So it is written, so it shall be done.

Tue, 06/29/2010 - 12:58 | 441861 VK
VK's picture

SPX 100, go long till 200 then ZERO. Game over.

Tue, 06/29/2010 - 13:07 | 441903 ATG
ATG's picture

SPY targeting 90.

Tue, 06/29/2010 - 13:55 | 442099 RichardENixon
RichardENixon's picture

Somewhere around S & P 500, Dow 5,000, Gold 5,000 is my guess.

Tue, 06/29/2010 - 14:27 | 442180 Johnny Bravo
Johnny Bravo's picture

That's what you get for "guessing."

Tue, 06/29/2010 - 21:27 | 443255 RichardENixon
RichardENixon's picture

We'll see Johnny. I hope my guess is wrong, but I've been guessing pretty accurately since 2007.

Tue, 06/29/2010 - 12:40 | 441797 Dont Taze Me Bro
Dont Taze Me Bro's picture

I guess this means that PPT will be busy during the next couple days.

Tue, 06/29/2010 - 13:37 | 442025 MarketTruth
MarketTruth's picture

Couple  days???  Try couple of hours. PPT action begins at 3:15pm today to be exact.

Could be 'breaking news' on something that then is used as a fake way to prop this dog of a market. Remember how many times this happened in 2008. SSDD.

Tue, 06/29/2010 - 12:40 | 441798 Dont Taze Me Bro
Dont Taze Me Bro's picture

I guess this means that PPT will be busy during the next couple days.

Tue, 06/29/2010 - 12:41 | 441800 rolo
rolo's picture

I was bearish before I read this but given Goldman's record lately, I'm wondering if I shouldn't be long...

Tue, 06/29/2010 - 13:06 | 441897 carbonmutant
carbonmutant's picture


Tue, 06/29/2010 - 13:30 | 442006 rolo
rolo's picture

great reply, thanks for that

Tue, 06/29/2010 - 15:06 | 442298 DosZap
DosZap's picture


Tue, 06/29/2010 - 12:43 | 441806 Mitchman
Mitchman's picture

But I thought Obammy and the Berbungler just told me the recovery was doing great?  WTF?

Tue, 06/29/2010 - 13:06 | 441840 carbonmutant
carbonmutant's picture


Tue, 06/29/2010 - 12:44 | 441811 GoldmanSux
GoldmanSux's picture

But I just saw Abby Joseph on CNBC yesterday, and she said.....

Tue, 06/29/2010 - 12:49 | 441812 Ethics Gradient
Ethics Gradient's picture

I'm not naturally contrarian, but coming from Goldman, that's got to be a signal to buy.

Maybe QE - the sequel <voiceover>Bigger, badder, tougher than before</voiceover> is closer than we think.

Tue, 06/29/2010 - 12:55 | 441848 bigdumbnugly
bigdumbnugly's picture

bet on it

Tue, 06/29/2010 - 13:03 | 441885 Turd Ferguson
Turd Ferguson's picture

Actually, I'd expect the S&P to drop through 1040 just to suck in a bunch of new shorts that GS will gladly fill. Then a big FuckYou rally back up to 1080.

Tue, 06/29/2010 - 13:13 | 441922 Mr. Anonymous
Mr. Anonymous's picture

Oh yeah, this is a total short-squeeze set up at the neckline.  Over on Ritholz's blog, there's talk of the bouncey effect of failed Head-And-Shoulders.  Straight to the moon if supports holds.  The neckline on the Chart at 2150 and Nazzy there holds.  GS coming out with its report is pure scamming to suck in shorts for fuel.  Sorry, no deal.

It's impossible to play this market short or long.

Tue, 06/29/2010 - 13:23 | 441974 Cleanclog
Cleanclog's picture

Rigged rigged rigged.  And some wonder why consumer confidence is down.  Howz about cuz no one trusts markets, currencies, governments or corporations anymore.

Tue, 06/29/2010 - 13:57 | 442106 RichardENixon
RichardENixon's picture

Could be wise to be ready to play it long till November, after that it's "Katie bar the door" as those wacky oldtimers used to say.

Tue, 06/29/2010 - 15:10 | 442306 DosZap
DosZap's picture

Mr. Anon,

Yes sir, GS got your nads either way...........they always win, even when we think they lose.

They simply a (New Acronym), ..........................



"It's impossible to play this market short or long."

Tue, 06/29/2010 - 12:45 | 441813 homersimpson
homersimpson's picture

Hmm.. where did I see this before.. ^GSPC hits around the 1040 range.. and magically jumps up in very short time periods during off hours due to a firm or two buying up what they can to make the market look better than it is.

Oh yea.. that happened a few weeks ago. JP Morgan if I'm not mistaken.

Tue, 06/29/2010 - 12:45 | 441814 vote_libertaria...
vote_libertarian_party's picture

...soooo it's safe to assume that GS has their shorts lined up now???

Tue, 06/29/2010 - 12:47 | 441826 buzzsaw99
buzzsaw99's picture

They speak of the market as if it is something powerful and beyond their control. Puhleeze! The squid sets the market, the squid is the market. All this, oh gee, we don't know what ever is going to happen! Claptrap is amusing.

Tue, 06/29/2010 - 12:49 | 441831 SheepDog-One
SheepDog-One's picture

If Goldman says so, then it shall be. Theyve got to create some mass panic for announced $5 trillion printfest.

Tue, 06/29/2010 - 13:00 | 441868 -Michelle-
-Michelle-'s picture

I think this is key.

Tue, 06/29/2010 - 13:00 | 441869 -Michelle-
-Michelle-'s picture


Tue, 06/29/2010 - 12:51 | 441836 John Law
John Law's picture

We have to make it through 975 first. That markes bear market territory. You can bet it will be all hands on deck there. I think they may hold it for a little bit but it will fall through as the data continues to deteriorate.

Tue, 06/29/2010 - 12:52 | 441838 Turd Ferguson
Turd Ferguson's picture

Has anyone heard anything out of Louise Yamada lately? I'd be very curious to hear what she makes of the recent S&P moves.

Tue, 06/29/2010 - 13:19 | 441957 New_Meat
New_Meat's picture

Rosie talked about her a couple of weeks back, some NY conference.

She's been on Bloomberg and stands on her SPX 600 and maybe later 400, no time frame as a good technician would.

- Ned

Tue, 06/29/2010 - 12:55 | 441850 LoneStarHog
LoneStarHog's picture

Just wait until the 50-DMA crosses below the 200-DMA, which is very close to happening.  It has already occurred in the last week in several global markets (e.g. FTSE).

Tue, 06/29/2010 - 12:57 | 441855 Turd Ferguson
Turd Ferguson's picture

About an hour ago on CNBS, Matt Nesto said, when discussing the 50-day/200-day crossover: "Mother of God. Look out below".

Tue, 06/29/2010 - 13:00 | 441871 LoneStarHog
LoneStarHog's picture

Yup!  In the laws of physics, it is the only thing that can tank faster and farther than ObamaRama's approval rating.

Tue, 06/29/2010 - 12:55 | 441851 Me XMan
Me XMan's picture

Holy SHIT!

Tue, 06/29/2010 - 12:57 | 441856 buzzsaw99
Tue, 06/29/2010 - 12:57 | 441859 taraxias
taraxias's picture

Why would anyone trade based on TA now is beyond me. It's like playing Texas Hold'em in Vegas with the cards in front of you facing up. Stupid.

Tue, 06/29/2010 - 13:17 | 441940 firstdivision
firstdivision's picture

Because algos cannot be programmed to follow intuition, so TA it is.

Tue, 06/29/2010 - 13:00 | 441870 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I am waiting for the latest dead cat bounce to occur. The squid has spoken and it will be done.

Tue, 06/29/2010 - 13:01 | 441873 carbonmutant
carbonmutant's picture

On the other hand if 1040 holds for the day we could get a bounce back to 1120 or so.

Tue, 06/29/2010 - 14:17 | 442152 sumo
sumo's picture

Yeah, I just closed a short position at 1045. Waiting to see what bounce the PPT has on today's menu.

Tue, 06/29/2010 - 13:02 | 441878 Tense INDIAN
Tense INDIAN's picture

and the BP oil spill data gets worse by the day....Thsi is really the WELL FROM HELL



Tue, 06/29/2010 - 14:01 | 442117 RichardENixon
RichardENixon's picture

Get out the tinfoil hats folks.

Tue, 06/29/2010 - 13:03 | 441884 scatterbrains
scatterbrains's picture

Oh perfect,  start buying as we approach the 1030ish stops at 1020ish. Looks like they are setting up another head and shoulders fake out break out.

Tue, 06/29/2010 - 13:09 | 441905 Turd Ferguson
Turd Ferguson's picture

that'd be my guess, too

Tue, 06/29/2010 - 13:15 | 441928 CPL
CPL's picture

You got it.  The pattern from other big drop days is a single statement.


"It corrected itself by magic."

Tue, 06/29/2010 - 13:38 | 442036 aaronb17
aaronb17's picture

I agree that the S&P chart looks an awful lot like last year's May-July head and shoulders pattern, except on steroids.  

I remember the first time the S&P popped up off the shoulder of that pattern last year.  I was so sure the market was going to dive back under 666 -- and then you could almost see the finger of Goldman Sachs reach out and push the damn price line upward in this completely unnatural way.   I've been bitterly cynical about this market ever since.

Tue, 06/29/2010 - 13:10 | 441907 Cyan Lite
Cyan Lite's picture

865 has been my target all along as well...

Tue, 06/29/2010 - 13:11 | 441912 ATG
ATG's picture

GS targeting 116.

Tue, 06/29/2010 - 13:14 | 441914 barkingbill
barkingbill's picture

im thinking the dead cat has bounced one too many times, he is starting to decompose and become less elastic, and his paws are starting to fall off....

Tue, 06/29/2010 - 14:21 | 442169 cougar_w
cougar_w's picture

Yeah but a couple cups of coffee later and I'm right as rain.

Tue, 06/29/2010 - 13:12 | 441917 CPL
CPL's picture

I predict the PPT will ruin my reindeer games at 3:30.


By MAGIC!! the market will erase all the loses.  Getting ready for TNA swing in with a tight stop loss

Tue, 06/29/2010 - 13:18 | 441949 firstdivision
firstdivision's picture

I am on the same wavelength.  I have my TZA sell ready to go at the press of a button and a TNA buy.

Tue, 06/29/2010 - 13:12 | 441919 jkruffin
jkruffin's picture

ES bids are very weak today, I think 1040 is going to be taken out by the end od the day.  Still sitting on my 1112 short too, not planning to cover until 850,  but moving stops as well and keeping them fairly tight, in case HAL9000 tries to screw me over with a flash melt up.

Tue, 06/29/2010 - 13:25 | 441986 CPL
CPL's picture

Don't bet on it.  I've traded WAY too many of these days.  It's amazing what the HP 365 HFT tower systems can do with damn near zero volume and incurring no cost per transaction plus 0 percent on borrowed money.


Sad is rigged.

Tue, 06/29/2010 - 13:35 | 442017 iPood
iPood's picture

Shit...the pessimism on this site is as thick as the pile of loss confirms accumulated by GS' clients..

Can a rally be far behind?





Tue, 06/29/2010 - 13:37 | 442030 Young
Young's picture

Usually when we have these blow out days on the downside (look at it sink some more at around 3:30) we always get an up day tomorrow. The Goldman suckering this time is that they'll take it above 1040 tomorrow. Counter trend time...

Tue, 06/29/2010 - 13:38 | 442034 firstdivision
firstdivision's picture

Wow GS is letting it get quite close to the "magic" number quite slowly so that shorts pile on like flies on horse$hit, then watch out for that snap back up like a bungee jumper.  Looks like another winning day for the prop desk at GS.

Tue, 06/29/2010 - 13:43 | 442055 AR15AU
AR15AU's picture

If goldman says H&S, then surely it will be a double top w/ rounding dome feature. 

Tue, 06/29/2010 - 13:46 | 442066 MrTrader
MrTrader's picture

Strong, strong, strong buy signal. 1325 here we come.

Tue, 06/29/2010 - 13:58 | 442101 Young
Young's picture

Has anyone noticed how "weak" the USD has been today considering ES is down 3%?

Tue, 06/29/2010 - 14:08 | 442133 firstdivision
firstdivision's picture

Selling TZA and buying some TNA. 

Tue, 06/29/2010 - 14:17 | 442155 wagefreedom
wagefreedom's picture

shit, guess it's time to cover

Tue, 06/29/2010 - 14:20 | 442164 Boilermaker
Boilermaker's picture

Holy Shit...I just saw Doug Flutie warming up on the trading floor.  Folks, this is going to be a barn burning finish.  But, a Hail Mary will be thrown and miraculously caught to safely distance SPX from the 1040 level yet again.


Tue, 06/29/2010 - 14:20 | 442165 AlienTrader
AlienTrader's picture

With that H&S pattern being so obvious and so many people talking about it, it is very likely that it will fail. I expect high volatilily and multiple failed neckline breaks.

Tue, 06/29/2010 - 14:24 | 442173 The Franchise
The Franchise's picture

The PPT must have Patrick Roy (rouuuuah) in net today. Stick save and a beauty!

Tue, 06/29/2010 - 14:33 | 442202 Johnny Bravo
Johnny Bravo's picture

That would be pronounced "Wah", as in "save by Wah"


A Colorado Avalanche fan.

Tue, 06/29/2010 - 14:35 | 442209 The Franchise
The Franchise's picture

As a Boston Bruins fan, we heard the pronunciation plenty after each first round bare knucked victory over the Hartford Whalers.

Tue, 06/29/2010 - 14:31 | 442194 Bankster T Cubed
Bankster T Cubed's picture

probably wrote this shit after getting greenlight to goose the shit out of futures if the SPX breaks 1040  - unlimited margin provided by the NY FED of course


seriously - they wouldn't have it any other way

Tue, 06/29/2010 - 14:33 | 442205 Tartarus
Tartarus's picture

The real question is: will Obama be able to successfully blame the Republicans for impeding his awesomeness?

Tue, 06/29/2010 - 15:24 | 442333 firstdivision
firstdivision's picture

It is now battle time between bots and humans.  Will we close below 1040, now I would have to say yes.  QE after close.

Tue, 06/29/2010 - 15:25 | 442336 -Michelle-
-Michelle-'s picture

1038 at 1523, although there's still plenty of time to push it back over 1040 today.

Tue, 06/29/2010 - 15:31 | 442361 What a mess_man
What a mess_man's picture

Well, we just broke through...

Tue, 06/29/2010 - 15:44 | 442412 PD Quig
PD Quig's picture

Replay of the June 2009 H&S? Like Yossarian watching the Bologna bomb line, the shorts think that if they give it a little extra room it will be confirmed and really hit the downside target this time. Da boyz didn't care last time how far down they had to take it to run the stops, and this time will be no different. They're harvesting organs again. Line up, donors.

Tue, 06/29/2010 - 18:03 | 442910 Borat
Borat's picture

Shouldn't that be a contrarian indicator???? buy buy buy....

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