The stock looks primed to fall to at least 478.88, a Hidden Pivot, although the obviousness of a structural support at 473.02 from a key low made in late June could give us an edge for bottom-fishing. Most traders will be looking for a bullish turn from somewhere above 473, but the Hidden Pivot at 478.88 gives us a more precise tool for speculating on this. Accordingly, I’ll suggest buying two November 560 calls if and when the stock gets within 40 cents of the target. Thereafter, a stop-loss at 477.88 can be used until the stock turns around. It’s difficult to say exactly how much the calls, which closed yesterday at 11.50, will be selling for with the stock at or near our price. My guess would be as low as $7, but probably not less than that because the calls could pick up volatility (aka “juice”) on a sharp break lower in the stock. Assuming your execution is smooth, the stop-loss I’ve advised should subject you to risk, in theory, of no more than about 40 cents per contract. _____ UPDATE (October 5): The low of this week’s swoon came within less than $2 of our 478.88 target, but because of the magnitude of the hysterical short-squeeze that followed, we’ll set aside any thoughts of bottom-fishing as we’d originally planned. In the end, it was not the Hidden Pivot that turned the stock, but the mob’s expectations that June 24’s low at 473.02 would act as support. Because the support is so obvious, it seems all but certain that GOOG will test it.
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Since bottoming on June 4, Google has generated the kind of impulse leg that could keep it buoyant for the rest of the summer. The rally exceeded no fewer than five “external” peaks on the daily chart without pausing for breath, a feat that will allow the stock to take its sweet old time consolidating the move in the days ahead. Let’s try to leg on a bullish butterfly spread by buying a call if and when Google falls to a Hidden Pivot support at 518.82. The target can be found on the 15-minute chart, where A=550.68 on July 7. Buy one September 600 call, using a stop-loss at 518. 20. Pay no more than the midpoint of the spread, since it is extremely wide. _______ UPDATE (9:16 p.m. EDT): Astounding! We thought that a $595 quote that flashed on our screen was an error. Evidently not. Earnings released after the close were so impressive that the stock is currently in the throes of a murderous short-squeeze to $600 — up nearly $70 over the day session close. So much for the call options we might have bought for around $6; they’ll be trading for at least $25 come morning.
We’ll set aside a “buy” down around 469, since the low of Google’s $60 June swoon appears to have missed the target by a few dollars. Now, looking at the lesser charts, the stock looks northbound to at least 505.50, the ‘D’ target of the pattern shown. The stock would have to do a little better, however, topping June 17’s 506.69 peak, to develop thrust for next week.
Google probably has a further six percent to fall before it will have a chance to find traction, since the minimum downside target implied on the daily chart is 469.54 (see inset). The midpoint sibling of that number is 507.63, so any rally to that number should be used as an opportunity to get short (although Tuesday’s thrust to 506.99 may have been it.) If the target doesn’t contain the selling, the stock would be facing more possible downside to 434.98, the target of another pattern on the daily chart. What makes the bearish case so compelling here is that neither of two important ’B’ coordinates was ’sausage’.
It was strictly dullsville at around 2 a.m. EDT, but if my high-confidence, bearish target for bellwether Google is going to be achieved, then the broad averages are about to come in for some heavy selling. Check out GOOG’s chart if you want to see what may lie in store for the world’s premier web-based company.
The stock looks like it’s setting up for a 30-point dive to a Hidden Pivot support at 479.84. The so-far low of a correction from 643 that is now entering its fourth month is 513.40, just 62 cents from the Hidden Pivot midpoint at 512.78. ’Camouflage’ shorts are advised, but keep in mind that you’ll need to be on charts of 15-minute degree or less in order to nail the minor swings with the to-the-penny-accuracy that successful ‘camo’ trading requires. In any event, we’ll look to botom-fish if and when GOOG reaches the target. _______ UPDATE: We’ll put this trade aside for now, since the stock is currently rising, evidently disinclined to breach the midpoint support.
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ou’ve got to admire Google for its pluck. Rather than cede even a dime’s worth of advertising business to Facebook merely because Facebook is so aggressive and clever, Google is about to add “social” functionality to its search engine. I’d like to think Google was encouraged to play hardball by the fact that Facebook had partnered with always-behind-the-curve Microsoft to develop customer information beneficial to Ballmer’s Bing search engine. Anyway, who do you want to bet on? For my part, I’ve extrapolated the most bullish target I can from the hourly chart — 610.12, a Hidden Pivot that can serve as a minimum upside objective target for the short- to intermediate-term. Consider it a lock-up if and when the stock closes for two consecutive days above its sibling midpoint, 591.57. (Note: One more minor resistance to monitor lies at 600.52.) Pivoteers may notice that I’ve treated the March 16-18 bend in the A-B impulse leg as non-existent. My justification for this is that it occurred before the rally had exceeded any external peaks.
If Google were to fall to 602.23, a midpoint Hidden Pivot, I’d be tempted to bid there aggressively with a stop-loss as tight as 601.99. A decline of such magnitude is not likely to happen today, especially since it would be bucking a forecast that calls for at least slightly higher highs for index futures. However, the target itself is compelling, and it will remain valid as long as 622.49 is not exceeded to the upside. ______ UPDATE (12:39 p.m. EST): GOOG ignored the pivot, falling instead to within 3 cents of the visually obvious support of Monday’s dramatic 601.23 low. Our theoretical loss on the trade was $24 per round lot, plus commissions. The too-obvious support aside, my hunch is that the breach of the pivot has ordained a further fall to its ‘d’ sibling, 581.97.
