Shares of Goldman Sachs (NYSE: GS) are falling despite a rising number of merger and acquisition opportunities.



Chart Courtesy of StockCharts.com

What gives? New deal announcements are fairly regularly appearing these days. Yet, Goldman Sachs, usually an intermediary in many deals, is in a down trend.

Goldman makes money when deals get done, as it often advises, underwrites them, or both. But this wave of deals isn't helping GS shares, which means that something else is going on.

To be sure, Goldman has lost a lot of its luster after the release of "The Big Short," a book that chronicled the behind the scene activity on Wall Street during the period that preceded the subprime mortgage crash. In the book (available in our bookstore), author Michael Lewis exposes how a handful of very perceptive fellows outsmarted the Wall Street money machine, and Goldman didn't come off very well, although Bear Stearns, Lehman Brothers, Morgan Stanley, UBS, and others looked worse.

Goldman finally settled with the SEC over its involvement in the subprime market. But the stock seems to be well within a bear market, as it crossed below its 200-day moving average in late July and it hasn't come back. Now it's about to break below its 50-day moving average.

So the real question is why Wall Street's biggest bank, such as it is, isn't rising when deal fever, of sorts, is hitting the street. The answer may be that investors are expecting more trouble ahead for earnings, or that something else is ongoing. It may also be that the smart money is starting to pull back its already filed down horns, and that the liquidity of Goldman shares is a convenient way to raise cash.

Anyway you look at it, when Goldman stumbles, there is a good chance that the market will eventually follow.

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