The Goldman Sachs Group, Inc. (GS) has gained ground with other Wall Street giants since 2016, but the stock still hasn't cleared stubborn resistance at the 2007 high posted at the height of the real estate and derivatives bubble. This inferior performance is unusual given the company's rock-solid reputation, indicating that financial reforms passed in the aftermath of the market crash have taken their toll on long-term profitability.

Time may be running out after 12 months of testing at that price level, with long-term relative strength indicators crossing over and setting off sell signals that will remain in force unless Goldman shares can mount the January high at $274. If not, the stock could drop many points in a remarkable failure that negatively affects the commercial banking sector, despite favorable legislation under the Trump administration. (See also: How Goldman Sachs Makes Its Money.)

GS Long-Term Chart (1999 – 2018)

The Wall Street giant came public at $68 in May 1999, at the height of the internet bubble, and sold off into the mid-$50s in August. A bounce into the new millennium lifted above the IPO opening print and ran into a buzzsaw of selling pressure near $130 in March 2000. Volatility spiked sharply into 2001 while the stock carved a broad triangular pattern that broke to the downside after the Sept. 11 attacks.

The subsequent decline found support just above the 1999 low in 2003, completing a double bottom reversal ahead of a powerful uptrend that posted multiple rally waves into the 2007 top at $251. The stock completed a two-year head and shoulders topping pattern 10 months later and plunged with world markets during the economic collapse, hitting an all-time low at $47.41 in November 2008.

A bounce into 2009 stalled just above the .618 Fibonacci sell-off retracement level, carving resistance that was not tested until 2014. The stock finally cleared that barrier in 2015, but the rally failed before reaching the 2000 high, yielding a steep decline that hit a three-year low in June 2016. That marked an excellent buying opportunity, generating a buying surge that reached 10-year resistance in March 2017. The stock has been testing that level for the past year, posting minor new highs but failing to gain traction. (For more, see: Goldman to Spend $2.5B to Buy Stakes in PE Firms.)

GS Short-Term Chart (2016 – 2018)

A double bottom at $138 in June 2016 signaled a new uptrend that took nine months to reach 2007 resistance. The uptick exceeded the prior high by less than five points and then rolled into a 40-point downtrend, grinding out a rounded correction into September 2017, when committed buyers took control. It returned to resistance once again in December, easing into a volatile sideways pattern that has crisscrossed the testing ground multiple times.

The stock is trading within pennies of the March 2017 high this week, meaning that shareholders haven't benefited from a financial sector rally that has lifted its competitors into a series of all-time highs. Patience may be wearing thin in the current adverse environment, in which many stocks appear to be topping out. We can see this countdown on the monthly stochastics oscillator, which has just crossed into its first sell cycle since July 2017.

On-balance volume (OBV) peaked at a multi-year high in the first quarter of 2017 and fell into April. Shallow buying interest since that time has failed to match price's ascent above $250, setting off a bearish divergence that tracks adverse relative strength signals. Bulls need to defend the February low at $239 in this scenario or risk a shareholder exodus that drops the stock toward $200. (See also: Top 4 Financial Stocks for 2018.)

The Bottom Line

Goldman Sachs stock rallied to 2007 resistance a year ago and has failed to break out, stuck in a holding pattern that is vulnerable to a major decline. Time is running out for bulls, with long-term sell cycles now taking control of price action. (For additional reading, check out: 11 Stocks That Outperform as Interest Rates Rise.)

<Disclosure: The author held no positions in the aforementioned securities at the time of publication.>