Schaeffer's Market Observation Features Goldman Sachs.

CINCINNATI -- Featured in today's Schaeffer's Market Observation is Goldman Sachs (NYSE: GS). This article is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

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You Want It? You Got It, Part III Pure Gold-man

A Technical and Sentiment Analysis of Goldman Sachs (GS)

The past two days, we have taken a look at stocks whose tickers have been heavily requested on our Schaeffer's Equity Scorecard. We took a look at Research in Motion Limited on Monday and followed that with an analysis of Google yesterday. Today it seems that visitors to our Scorecard are interested in Goldman Sachs (NYSE:GS).

According to Russian news agency Prime-Tass, GS bought a stake in Russian debt-collecting agency ZAO Sequoia Credit Consolidation. Reportedly GS's share is more than a blocking stake, but less than a controlling one and it isn't clear how much the American investment bank spent for its stake. Could GS believe that Russia is the next emerging market? We shall see. This could be the reason for the interest in the company's scorecard today, or it could be that the broker/dealer sector garners a great deal of interest. This sector features many highly rated stocks, and one of those is GS; another is E*TRADE Financial (ET), which was covered by my colleague Jocelynn Drake today in Behind the Headlines.

Technically, and simply put, GS is an outstanding performer. Although the shares have retreated from the 180 level a bit, they have pulled back to the support of their 10-day moving average. While this trendline is important as a line of support, let's take a look at some of the other support that the stock could rely on, if need be. One of those trendlines is GS's 10-week trendline. While it appeared that this trendline may have stalled out at the 160 level, that wasn't the case. In fact, a recent bullish cross of its 20-week counterpart suggests that the 10-week trendline's move could continue higher and drag the stock along for the ride.

GS's solid performance since the beginning of 2003 hasn't relied solely on its 10-week and 20-week moving averages; in fact, its 10-month and 20-month moving averages may be due more of the credit. Since March 2003, this tandem support has failed once. I don't know about you, but I would call that solid support.

I certainly feel safe in saying that GS's performance is impressive, but let's take a look at how the Street feels. Here is GS's sentiment rundown:

* Percent of analysts tracked by Zacks who rate the stock with a "buy" or better: 60%

* Number of analysts tracked by Zacks: 15

* Short interest as a percent of float: 2.53%

* Short-interest ratio: 2.52

* Schaeffer's put/call open interest ratio (SOIR): 1.36

* SOIR percent rank: 98

Yes, there is a fair share of red in the list above; I used that to signal sentiment indicators that I feel have potential negative implications. Normally (if I can use that term) I would want to see more pessimism from analysts and a better chance for potential short-covering support. That said, I can deal with my own insecurities when I look at GS's long-term performance. In addition, the sentiment isn't overwhelmingly stacked against GS. In fact, if the six analysts giving the firm a "hold" rating have a change of heart, the stock could move higher.

The options crowd is now aligned firmly against GS. The firm's Schaeffer's put/call open interest ratio (SOIR) of 1.36 is higher than 98 percent of those taken during the past 52 weeks. If this reluctant group eventually changes their feelings toward GS, watch for buying pressure to push the stock higher still. When looking to play a position on GS, I feel it is a no-brainer (which some may argue is perfect for me). The firm's Schaeffer's Equity Scorecard rating of 8.0 out of a possible 10 suggests that there is ample sideline money to push GS higher as investors are drawn into the game.

Click the following link to see a Weekly and Monthly Chart of GS, both since January 2003 with respective 10- and 20-unit Moving Averages: http://www.schaeffersresearch.com/wire?ID=17525.

Take advantage of the timely Schaeffer commentaries by signing up for their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day and get entered to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROAW13M&PAGE=1.

About Schaeffer's Investment Research (www.SchaeffersResearch.com) Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com, is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method.