Google

Google's dithering at an important rally target (see inset) is indicative of larger uncertainties weighing on Wall Street at the moment. I'm on record with a prediction that the broad averages will rally to at least marginal new highs before they can collapse in earnest. If the same holds true for GOOG, we might expect a false breakout to the Hidden Pivot midpoint shown, p=1192.73; or if any higher, to its 'D' sibling, 1204.20. We should pay close attention to these targets -- either is shortable if tightly stopped --  especially the latter, since an indisputable bellwether stock can offer greater clarity than the broad averages for purposes of picking a tradable top. _______ UPDATE (February 14, 11:23 a.m.) Google hit a high today of 1204.46 -- 26 cents above our target. It has since fallen to a so far low of 1198.08. _______ UPDATE (February 18, 12:03 a.m.): The 1204.20 target is not chopped liver, as I like to say, but we cannot dismiss the possibility that GOOG is fixing to blow past it.  The Whoopee Cushion bounce Friday off the lows implied DaBoyz are surely game to try. If so, expect the rally to continue to at least 1229.57. If you're intent on shorting that Hidden Pivot, you are obliged to try your hardest to be long on the way to it. _______ UPDATE (February 19, 11:02 p.m.): The rally sputtered out at 1212.87, well shy of my target.  Google's lesser charts are now bearishly impulsive, and the stock will be telegraphing more weakness if it overshoots 'd' targets of corrective patterns. _______ UPDATE (February 24, 1:44 a.m. EST): If, on the other hand, bears are unable to wrestle this beast to the mat -- meaning, take it below C=1197.50 (see inset) -- we should presume that a

At one point yesterday, virtually all of the hot stocks and high-fliers that I track were 'in-the-green'.  In saner times, when shares were driven by actual investors rather than by algorithms programmed to throw limitless sums of Other People's Money at the market, we might have expected such an excess of overbought zeal to produce a nasty reaction. Not any longer, though. Check out GOOG's hourly chart (inset), which shows buyers tripping over themselves to avoid missing the next monster leap. Indeed, there appears to be sufficient momentum in yesterday's short-squeezed spasm to suggest that buyers won't rest until they test the all-time high near 1170.  Evidence of this is strongest in the fact that the selloff did not even reach the 'hidden' support at 1086 (red line) where we would typically look for a corrective move to reverse. So what's next? Hidden Pivot analysis suggests GOOG will reach 1192.12 with the next manic leap. That would become an odds-on bet if the stock can close for two consecutive days above the 1136.69 midpoint pivot associated with the target itself.

Google's relapse to the Hidden Pivot midpoint of the big-rally pattern shown was a buying opportunity according to our rules, but the subsequent bounce has been so powerful that further opportunities to get long on the way to the 1164 target seem likely. Since the stock is in record territory and there are therefore no 'external' peaks to reference, you should look for your entry opportunities on charts of 15-minute degree or less.

Google's weakness in recent days has brought the stock down to the sweet spot for the eight November 1000-1010-1020 call butterfly spreads we hold. Subscribers legged into this position for a 3.00 credit, guaranteeing a profit of at least $2400 no matter what the stock does.  The spread could have been sold on Thursday's closing marks for a 1.80 credit, yielding additional gains of $1440, for a total of $3840.  Our maximum theoretical profit would be $10400 with the stock trading $1010 next Friday, when the calls expire. However, that implies covering (i.e., buying back) the 1010s we are short for nothing, selling the 1000s that we are long for $10 ($1000) apiece, and writing off the 1020s as a complete loss. In practice, we should start covering (i.e., exiting) at least some of the spreads now, while the stock is hovering near $1010. Accordingly, I'll recommend offering four of them to close for $2.50, day order.  A modest rally or blip up to $1010 at any point in the day would put that price well within reach. The spread will widen to our benefit if GOOG oscillates around $1010 next week, but any sharp move higher and lower would probably push it down to $2 or lower. _______ UPDATE (November 11, 8:00 p.m. EST): We couldn't have asked for a better opportunity to exit our butterfly position. With four days to go before the November options expire, Google has fallen to the 1010 strike on which the spread was centered.  This has made it an easy sale, and on yesterday's closing marks subscribers could have come away with $4.50 per spread (by covering the two 1010s you are short for a total of $14.60 and simultaneously selling the 1000 and 1020 calls you are long for 19.10 total.  Added

I'll use a 0.65 fill [revised to 0.47 -- see update below] reported in the chat room yesterday as our cost basis for eight November 1000-1010 call spreads recommended for purchase a while back. Weak as the stock was, the spread could have been bought for as little as 0.30 intraday.  Because Google is not likely to make much headway with The Shutdown weighing on the stock market, I'll now recommend offering the November 1010-1020 call spread eight times for 0.65 or better. If we succeed, we will have legged into butterfly spreads that could produce a profit of as much as $1000 apiece without risk. It will require a rally of perhaps 16-18 points to get us filled, however, and if it fails to materialize, I may advise a stop-loss for the spread we already hold.  Price action near the 863.63 midpoint pivot of the pattern shown implies that Google could fall to 851.58 if the support fails.  The 858.41 target of a larger pattern could help break the fall, or perhaps even engender the rally we'd be looking to short via the Nov 1010-1020 spread.  _______ UPDATE (8:24 p.m. EDT):  The low of yesterday's 14-point swoon occurred at 851.63, a nickel from the 851.58 target flagged above. However, because there were no reports in the chat room of anyone getting aboard, I will not be tracking a trade.  Meanwhile, I am still waiting to hear from traders who got filled on the call spread, since the 0.65 price mentioned above was achieved by a trader who forgot he'd left the order in.  If I don't hear from anyone else, I'll assume nothing done and drop guidance. _______ UPDATE (October 9, 8:09 p.m. EDT):  Fills down to 0.38 have been reported, but I'll use a mid-range price at 0.47

On a hunch that the stock has eyes for $1000, we've been working a lowball bid for some November 1000-1010 call spreads. The stock has weakened since, and although that could provide us with an even better opportunity, I'll suggest shifting the effort to the December calls. Accordingly, let's bid 0.70 for eight December 1000-1010 spreads -- about midway between the current bid/offer of 0.40/1.10 -- good till canceled.  The bid should be made contingent on the stock trading 875 or higher, but you can continue bidding if GOOG falls below that number, lowering your bid by 2 cents for each dollar the stock falls. That would imply a spread bid of 0.64 if the stock is trading around 872.00. Please note that GOOG could fall to as low as 861.96, the correction target of the pattern shown, before bottoming.  ______ UPDATE (8:32 p.m. EDT): With the stock moving higher, you can raise the spread bid to 0.80 if GOOG is trading above 885, and to 0.90 if above 890. If this gambit gets away from us, we'll try another approach: legging on the spread, doing the buy side first on weakness.

I pay scant attention to head-and-shoulders patterns, since they tend to be everywhere you look for them. However, the shapeliness of the one that has been developing in this stock for the last five months (see inset) deserves at least a passing mention, since, if you go by the textbook, it would appear to put a lid on the ballistic rally from August's 845 low. My hunch is that the pattern will be aborted by a push above early August's 909.71 peak, creating a powerfully bullish impulse leg on the daily chart. If so, bull spreads targeted on 1000 seem like a promising play. Accordingly, I'll suggest entering a good-till-canceled spread order -- four November 1000-1010 call spreads @ 0.60, contingent on the stock trading 895.00 or higher.  If you can leg it on for 0.20 or less you, raise the position size to 16. _______ UPDATE (September 25):  The head-and-shoulders pattern that I dissed earlier this month in the tout above has only grown more comely and compelling since. Even so, I still think the stock is bound for $1000. Accordingly, we'll continue to bid for the spread, but paying less:   0.25 for sixteen of them, good till week's end and contingent on GOOG trading 882 or higher.

Google's sharp reversal after breaching a red-line support suggest not only that DaBoyz still have their eyes on $1000, but that their strategy for getting there will be a take-no-prisoners approach. We attempted earlier without success to get into some bull spreads centered on the $1000 strike, but it's probably time to think about trying again. We'll wait for a pullback, however, since the rally off the recent low at 845 is starting to look a little overdrawn. Stay tuned. _______ UPDATE (September 17, 2:33 p.m. EDT): With the stock currently trading near 884, you can continue to bid for the spread -- 0.20 for sixteen of them -- with GOOG 880 or higher. It is currently quoted at 0.30-0.85.

Earlier, we plotted to lay in some butterfly spreads centered on the 1000 strike, since it seems entirely likely that GOOG will eventually get there. The come-to-papa approach didn't work, however, since the stock has a habit of creating trampoline lows that are too fleeting to position-trade. However, Friday's closing marks suggest that the September 990-1000-1010 call butterfly can be bought for close to 'even', and so that's what I'll suggest. That implies shorting two Sep 1000 calls, buying one Sep 990 and one Sep 1010 for a net debit of zero. If you have to pay as much as 0.10, though, that would be acceptable, since the spread has the potential to widen to 10.00, yielding a 100-to-1 bet.  I've reproduced a table that shows bids and offers for the options we're looking at. If you were to do all three sides on the 'asked' price, that would imply buying the 'fly for a 0.05 debit.  If you do not understand how I've calculated this sum, you should not attempt the trade.  ______ UPDATE (August 5 at 12:13 a.m. EDT):  Any fills to report?  If so, please let me know in the chat room.  This position, which was very do-able on Friday, would make an excellent 'straddle' hedge if done in conjunction with the put spread I recommended in DIA (which several of you evidently have completed).