Goldman KO's market, KBW bank index w/one punch

anyone else catch this today? I got the news around 2pm from a position alert in my brokerage account--ironically my goldman sachs short haha. Anyhow, based on their knowledge of the latest additions and revisions to FINREG, Goldman analyst is saying the largest commercial and super-regionals will shed approximately 10-20% of current earnings, and this earnings effect could be felt as soon as Q3/Q4 this year. Goldman itself was struggling and just barely holding that $139 area, from Monday's low, as this hit news and then hit CNBC. Needless to say, it printed low $136s before getting a small bounce to close just above 137. $137 is a very very key level for GS, its the first major fibb retracement level its reached from its near 12 month charge from $47 in late 2008 to its 52week high of 193.60. $137.76 marks the 38.2% fib retracement of that rally, and GS' last tick at 4pm was 137.51. It did fall another couple bucks in after-hours trading on this bank news and some gloomy 4pm index futures prices. So, I think one would be naive to think Goldman is telling us how to value banks for our benefit and financial well-being. Sort of like how their conviction buy list stocks make pretty good short sales IMO. They've also got to be aware that their own stock was sitting just above this key technical level where some buying would very likely have stepped in if not for this news. So is GS laying a bear trap? Some of this market's biggest, sharpest u-turns or bullish reversals have come ironically just after news or technicals give the strongest sell signals. The S&P closed below its 50% fib retracement level Tuesday, which was just above 1121. Based on trading FIb levels, GS and the S&P would be headed significantly lower if they do not retest, get above, and then firmly hold 137.76 and 1121, respectively. In other words, shorts may really try to sink their teeth into the market Wednesday morning, and I can totally see market makers , namely goldman, use these shorts as ammo for a rally back above 1170. Alot is riding on the next few days--the inverse head/shoulders potential bottom formation is still intact as long as the SPX doesnt go back below 1110. On the other hand, the break of 1121 could be significant, and if we get selling that tells us how significant it was, there's not much room left to go down before getting back down to the 200 DMA around 1101. We've already opened the door to sub-1110 levels by closing below Friday 5/7's close and if we dont hold 5/7s 1094 lows on a break of the 200 DMA, we'll be sitting back near 1050 before alot of folks know what hit them. FWIW, GS has technically made $120 a very realistic possibility--and coincidentally, $120.51 would be the 50% retracement of the 2008/2009 rally in GS shares. I opened up some July GS 125 puts back in April, a few days after the SEC suit was announced, b/c the technicals were screaming for a move at least that low after its $20-30 point drops on the Friday that news hit. Since then? It sneakily makes ever so slightly lower lows every few days, and looks surprisingly strong given the weak tape lately, only to have the bottom fall out every 10 days or so, and take it down $5-7 to a new range. I've been tempted to close out my puts a few times, only to be rewarded for my patience within a day or less each time. For example, dip buying and short covering Friday and Monday were so intense into the close that GS really looked primed to retest $150 from the downside, only to have the bottom simply fall out during Tuesdays' open. Very very tricky stock to trade, I've been most successful trading GS when I pick a level out 2-4 weeks or more, and then play the patient waiting game. IF not, trading the noise and daily fluctuations will leave you confused, annoyed and likely whipsaw you out of your own theory/position before long An early retest of $137.75 will be critical, and if it fails there, I'll actually be adding to my 125 july puts.

So is GS laying a bear trap?

There may be a bear trap but Goldman is not laying it. 2 sessions before they made this call on the banks, they bought puts heavily in XLF. I think they are responsible and are behind the market panic currently happening. Watch this video from friday of last week