Goldman Sachs Earnings: GS shares soar past $300 after explosive Q2 results

UPDATE: Goldman Sachs sure does not seem to see a hurricane on the horizon. Q2 results released before Monday's open destroyed consensus after analysts had been reducing their outlook based on perceived poor investment banking and wealth management fees. Goldman's Q2 GAAP EPS of $7.73 beat the consensus figure of $6.69 by 15.5%. Likewise revenue of $11.86 billion was 10.8% ahead of the outlook for $10.7 billion. Consumer & Wealth Management revenue of $2.18 billion was 25% higher YoY. Investment Banking generated $2.14 billion in revenue, and the Global Markets segment provided $6.47 billion. GS shares are up 3.6% to $304.30 in the premarket.

Goldman Sachs (GS) stock is climbing about 1% in Monday's premarket just shy of  $297 in anticipation of a second quarter earnings beat. Goldman will release results shortly before the market opens on Monday. GS stock advanced 4.4% to $293.87 on Friday after positive results from Wells Fargo (WFC) and Citigroup (C).

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Goldman Sachs earnings preview: Not much concern despite downgrades

The Wall Street analyst community has Goldman Sachs pegged for $6.69 in GAAP earnings per share (EPS) on revenue of $10.7 billion. JPMorgan's earnings released last week do not seem to be causing much concern as the positive commercial lending results from Wells Fargo and Citigroup seem to show an economy that is still quite healthy.

Goldman Sachs did better than many of the major commercial lenders in last month's Federal Reserve stress test. At the time some analysts said Goldman's stress capital buffer likely fell by ten basis points.

Baird Equity Research explained in a recent note to its clients that its data shows that fees from investment banking, mortgages and wealth management divisions appear to be declining for the second quarter. Since Goldman earns a substantial percentage of its revenue from investment banking and wealth management fees, the Q2 earnings results might surprise markets to the downside. Down 25% year to date, however, at least some negativity should already be priced in.

Over the past eight quarters, Goldman Sachs has beaten EPS forecasts nearly 90% of the time but revenue forecasts just 63% of the time. Over the past 90 days, there have been 13 analyst downgrades to EPS for Q2 and no upgrades whatsoever.

Goldman Sachs stock forecast: Focus on short-term correction or long-term rally?

Goldman Sachs stock has been trading within a declinding parallel price channel since the start of the year. Currently, the bottom trend line is at $272, and the top trend line is at $313. The 15-week moving average provides resistance at $306, below the top trend line. The 30-week moving average, above the top trend line, sits at $331 currently. This demonstrates the obstactles in the way of GS stock regaining last year's high at $420.

If there is any good news it is that the Moving Average Convergence Divergence (MACD) indicator has begun crossing over the signal line on the weekly chart below. A move above $313 will confirm a longer-term rally is in the offing.

GS weekly chart