Goldman Sachs. (GS)
8/6/07 Update

It took a while, but Goldman is finally experiencing the breakdown discussed way back in March.  I wanted to update where the stock is at this stage, and our expectations for the short play. 

After hitting a new high of 233 in June, the stock appears to be undergoing a 5-wave decline that should ultimately trace out a Wave A pattern.  If correct, then it should be in the third wave of A right now.  The stock broke a support area at 178 this morning, with the next available support at the 167-165 area.  Most ideally, Wave A would retrace back to the previous Wave 4, or smaller Wave ( ii ) of 5, both common retracements, which would have it between 138 and 147.  Some upside resistance levels are 178, 182 and 197.

For the option, and given current pricing, were looking at the January 2008 $125 Put (symbol GSME), which despite being out of the money, stilled popped in price reflecting the high volatility in the underlying stock.  The contract is now selling for $5.40.

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