I think the stock is one of the weakest in the technology sector.

1. Its below 20 day moving average down on huge volume. (trend confirms short term down)

2. Expect the huge gap to fill at around 100 and 90.

3. We filled the upside gap at 120 and now breakdown on consolidation

I think the stock might bounce and there might be better short prices because of such large drop today. However, the trend is down and I have no problem paying low prices at shorts.

The stop is going to be around 120, with a 30% portfolio, you have a risk of about 3.3% to make 3-5%. I will reevaluate the trade if the price goes above 115 and will exit if it doesn't drop soon.

XHB is banged up against 2 year high. I personally don't believe that the market will take this lagging index to the upside until the market proves otherwise.

Some technical reasons.

1. The last bar has huge volume, a possible exhausion bar after a huge run up.

2. Up against 2 year high. Not likely to break it at least with some consolidation. In that case, I need to just get out if it doesn't crash back down.

Above 20-21 bucks, I am wrong and this thing could take off. I might consider long at that point.

Risk is about 8%, so 4 % of total portfolio at 50% position, if you want 3% explosure. Use 40% position instead.

This is not a trade, I personally believe that goldman is unlikely to go below 87 dollars for several reasons. First of all, this company owns 89.78 dollars per share in CASH with a book value of 142.27. IE if GS is liquidated today, it would be worth 142.27. Obviously this measurement isn't always true or else the the price wouldn't fall below that. The stock rarely go below its cash/share price though. The stock also pays a decent dividend of 1.5% which is not bad compared to citibank or BAC.

In 2008, many companies were actually below their book value for an extended period of time and a ratio of .5 (shareprice/bookvalue)

For a relatively long term holding. I believe two things will happen,

1. Fed will raise interest rate in the long term. IE banks will be more profitable and make more money.

2. Goldman sachs is considered the best investment bank, they may be shaddy, but they undeniably make the most amount of dollars.

3. Seasonality on the last week of the year + bullish January seasonality will boost stock prices for month ahead

Technical analysis:

1. Daily chart shows bearish since its still in a down trend. But we have strong support at 87.50, and bounced 3 times already. Hmm, didn't I say this number before? It is the worth of the cash position I mentioned earlier.

2. XLF, the financial sector etf is a big chop, but we are at the lower range of a the consolidation which IMO is a good buy.

My stop is the low of the 52week low. It has strong support. However, I am not going to "hope" that it will recover in value if it goes below this point. The risk is about 10%, so I recommend a risk appetite of 3% of your portfolio or 33% position.

UPDATE: 1-11-2012 moving stop to 94.50, right below the gap. Lock in some profit.

UPDATE2 1-12-2012 moving stop to 96.9, right below the opening gap. Market is unstable.