Google

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.

Google has been marking time for more than six weeks, but unless it can pop above the 558.52 high recorded on September 20, a fall of at least 10 percent to the 478.88 target shown will remain in prospect. The stock has thus far held its ground near the midpoint support, but the failure of Tuesday's short-squeeze rally to stay aloft may force the hand of the stock's institutional sponsors.

Is that peak internal -- or is it external? The answer is not always perfectly clear, but the good news is that you shouldn’t worry about it too much. It is the big picture that counts, and this session focuses quite intensively on Google charts to show you exactly how to relax. Our hour together concludes with an analysis of the Dollar Index that shows why the greenback is all but certain to head higher in the weeks and perhaps months ahead.

Google got within pitching-wedge distance yesterday of the 562.27 rally target shown in the chart. Now, if the stock gets second wind and pushes back up to our number or somewhere very close to it, we should try to get short using camouflage. Specifically, I'll recommend shorting 200 shares at the first downtrending 'X' of minor degree after the target is approached within, say, 60 cents.  You could also try something easier but somewhat more risky, offering 200 shares short at 562.19, stop 562.41.  ______ UPDATE: We'll put this one aside for now following yesterday's plunge to 538.

We wish Google all possible success in taking on playground bullies Apple and Microsoft in a battle that has crucial implications for the use of patents to stifle competition. Google’s $12.5 billion purchase of cell phone maker Motorola Mobility, its largest acquisition to date, is a shot across the bow of more established competitors who would seek to throttle the search engine giant’s cell phone development and other promising technologies by suing them to death in patent court.  The Wall Street Journal recently detailed how high tech companies have been acquiring every patent they can get their hands on so that they stand a better chance of being predator rather than prey in patent litigation. Lawsuits over patents have become so ubiquitous that they are beginning to supersede innovation itself as the primary means through which high tech companies grow and prosper. In this respect, Google is the new kid on the block in head-to-head competition with firms like Microsoft and Apple that have been around since the 1980s.  As a relative newcomer to the technology scene, the company’s war-chest of patents was practically empty until recently. To play catch-up, Google has been on a tear acquiring patents directly or buying patent-rich firms outright, such as cell phone pioneer Motorola.  In late July, Google bought about a thousand pending and issued patents from IBM to build up its patent ammo. Many of these patents have little to do with the company’s core businesses of search and advertising. One reportedly covers ways of automatically adjusting a clock, and another deals with surface treatments for electrical contacts. In the hands of a company as innovative and aggressive as Google, every little patent helps to thwart other firms that would seek to stifle them. “As things stand today, one of a company’s best

Where would you invest $76 billion if you had it?  That’s the size of Apple’s cash hoard at the moment, and it would appear that they have no better idea of what to do with all that money than you or I.  Apple isn’t the only company with this “problem,” if you could call having a mountain of spare cash in the bank a problem. According to Standard & Poor’s data reported by the Wall Street Journal the other day, the 500 largest U.S. companies alone currently hold cash or cash equivalents that totaled $963 billion at the end of the first quarter, up from $837 billion a year ago.  Tech companies in particular are glutted with cash they apparently cannot use. Microsoft’s got $60.9 billion sitting around; Google, $39.1 billion; and Cisco, $43.4 billion. What’s a company to do? Traditionally, high-tech companies have shunned paying dividends because shareholders expect the companies to use the cash more aggressively for growth. But the likes of Apple and Google have been growing plenty fast without dipping into their so-called war chests. Come to think of it, maybe they should start a war with China, Europe or Brazil.  Hasn’t war always been good for business? As for the excuse that they need to hold cash in case a great acquisition opportunity comes along, Apple, Google and numerous other NASDAQ world-beaters could borrow all they want for next to nothing, at any time.  And so they have been. We reported on the surge in corporate borrowing a while back, mystified as to why a corporate sector with nearly $2 trillion to spare was nevertheless borrowing hand-over-fist. The ostensible reason is that the money can be borrowed for nearly nothing – and so, why not?  Indeed.  Even so, we can’t help thinking that a wave

If a millennial tide of Fed funny-money can push the broad stock averages higher no matter what the economic climate, just imagine what it can do for the shares of companies with strong earnings growth in these recessionary times. In particular, Google, IBM and Apple have soared in recent days on stellar Q2 reports and giddy rumors. Yesterday it was Big Blue that took flight, gapping up five percent on news of exceptional top-line growth.  Even better for investors was that the company expects this growth to continue for at least the rest of 2011 in all of its lines: hardware, software and business services. We wrote here a long while back that IBM bonds were probably a safer and better bet than U.S. Treasurys, and we still think this is so. There were a few other blue chip companies on our short list that one could imagine will do pretty well even if economic activity in the U.S. sinks to depressionary levels. Johnson & Johnson, Disney, Caterpillar, 3M and Safeway come to mind, as well as Apple, which, despite its pricey merchandise, stands to rake in tens of billions of dollars over the years from nickel-and-dime sales of iTunes to an imponderably large number of music lovers. Google’s explosive short-squeeze came earlier in the week, when the stock gapped from 529 to 598 overnight – that’s nearly 14%! -- on the sensational earnings report that nearly everyone must have expected. Apple’s numbers were to have been reported after the close on Tuesday, but the stock seemed uncharacteristically subdued ahead of the announcement. This is probably because AAPL, even more than GOOG or IBM, has spent the last few weeks discounting the best news anyone could imagine.  Apple shares that traded as low as 310 on June 20 have since

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.

Share valuations ahead of Dot-Com Bust II have been crazy-stupid, demonstrating yet again, to borrow Mencken’s line, that no firm in the IPO business will ever go broke underestimating the intelligence of the American investor.  Witness the huge markups paid last May for IPO shares of the still profit-less LinkedIn, a company that purports to network business contacts between individual users. Instead, and as far as we can surmise, LinkedIn has grown its subscriber base using viral techniques, mailing out link “requests” to people like your editor, who thus far has failed to throttle such e-mails. The result is that, although LinkedIn has collected a zillion names, e-mail addresses and personal data from registrants, the registrants themselves are only tenuously tied, a vast nervous system unconnected to a brain.  Of course, this didn’t stop investors from trampling each other to pay ridiculous prices for LNKD stock when the company went public last May.  Shares expected to fetch around $35 soared to $122.70 on opening day and currently trade for around $94. This is notwithstanding the fact that LinkedIn, like Facebook, has yet to develop a revenue model even remotely capable of vindicating the outlandish multiples speculators seem willing to pay for an equity stake. Meanwhile, even as the thimble-riggers and confidence men at Goldman and other Wall Street firms salivate over the prospect of retailing insider shares of Facebook to the rubes at superheated premiums, Google is threatening to eat Facebook’s lunch and perhaps make Mark Zuckerberg’s Great New Idea the next Internet has-been. How scared is Facebook?  Some bloggers have accused the company of hiring moles to churn out hostile comments on Google+, a new social networking service that has generated such hot demand that Google had to suspend invitations to try the beta version.  And the reviewer at