Google has labored mightily to hold above the May 6 low at 460, but it looks like the stock will need to come down a bit more, to at least 453.90, to make a durable bottom. We haven’t traded the stock in a while, but we’ll want to buy some shares if and when the stock falls to the target. It’s possible to nail the swings within about 20 cents when we are trading off the 15-minute chart, but in this case I’ve used 180-minute bars to project the swing low. Under the circumstances, I’ve set an alert so that we can try to use camouflage if and when this bottom-fishing opportunity materializes. ______ UPDATE: Cancel the order, since Google is on a flight of fancy that projects to at least 500.75.
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With yesterday’s 500.47 low, Google is closing on a 488.33 target, a Hidden Pivot that would max out the theoretical downside on the daily chart. I don’t trust this stock to give us a precise low for bottom-fishing with a tight stop-loss, but my expectations are high for a tradable turn from somewhere very close to our number. If you’re hunting for camouflage, I’d jump onto the 3-minute bars if and when Google comes down to 490.50. I’ve set a screen alert so that if the opportunity presents itself, we can try to catch this one together during a real-time webinar. I haven’t played around with Google this way before, but I suspect the stock can be easily cornered and trapped if we chase it down on the very lesser charts as it approaches a crucial turning point. ______ UPDATE: With the Dow in a thousand-point freefall, Google bottomed at $460, down $50. However, the subsequent surreal, $50 bounce occurred too quickly to act upon, much less discuss in a webinar.
I broached a 607.98 target today in the chat room, but let me repeat it here to make it official. It has already been corroborated by a stall in late March near the 573.84 midpoint, which can be used for bottom-fishing in the event of a pullback before GOOG makes its final ascent. Camouflage for bulls will be hard to come by after yesterday’s moon shot, but if you’re looking for it, I’d suggest watching for ABCs on the 3-minute chart or less.
The source of Google’s dithering is two midpoint resistance pivots at, respectively, 574.01 and 576.17. Although the stock has already exceeded the lower of them intraday, we’ll stipulate that it close above the higher for two consecutive days before we assume it is ready to power higher. If and when that day arrives, our minimum upside projection would be 592.32, with a shot at 608.33 if it’s decisively exceeded.
Yesterday’s rally was impulsive, since it surpassed two “internal” peaks and one external on the hourly chart. In this respect, the stock was stronger than the market as a whole, and it could lead the averages higher if the buying tempo picks up. That would take a print today above 544.40, the midpoint resistance of the pattern shown in the chart. A close above that Hidden Pivot would hint of more upside over the near term to as high as 550.46.
For the grave sin of reporting spectacular earnings and talking about new markets it plans to enter and conquer, Google’s shares have been savaged in recent weeks. That’s the price a company must sometimes pay when its shares are heavily in demand by institutional buyers keen on value. Even so, the so-far $94 shakeout from early January’s peak has yet to take out a single prior low on the weekly chart, let alone the two we require to signal a bearish impulse leg. That would imply a further fall of $60, a possibility we would not disparage, given the fact that GOOG’s sponsorship is so heavily skewed toward managed portfolios.
With Google helping lead the market lower, we should pay attention to a 542.61 Hidden Pivot support that could temporarily arrest the stock’s fall. That’s my minimum downside objective for now, and it lies exactly $6.39 beneath yesterday’s shell-shocked low.
It looks like there is still more damage to be done, and I therefore suggest using a Hidden Pivot support at 567.71 as a minimum downside objective, or 563.64 if any lower. If the latter number is reached, the correction from early January’s high at 629.51 will have been a tad more than 10 percent.
A 586.08 target broached in the chat room Tuesday is still my minimum downside target for this correction. It is a Hidden Pivot midpoint, but if it is breached decisively we should infer that its ‘D’ sibling at 567.71 is in play. This matters because Google was a market leader in December, one of the few companies that seems able to make money hand-over-fist in a very tough economy. By implication, it would be bullish for the market as a whole if Google were to reverse and push above 611.39 this week without having reached 586.08.
