Thursday, January 26, 2012

GOOG Trade - Part II: Bounce and Sell-off Again

Google is known for gapping after every earnings report. This phenomenon can be attributed to the fact that company does not provide any guidance. Analysts and traders end up guessing the numbers wrong, resulting in violent reaction.

On January 9th I was concerned about GOOG missing Q4 earnings, due to the price action. It did...

Price gapped down hard and continued below. It is now almost at laminate support of 200 dma and two gap fills. I expect a bounce in that area +/- 5 points. Subsequent rally to low 600 level will be met with overhead supply. I expect another sell-off to start there. It will send the price down to the low 500 level to fill more open gaps and pull back to long-term trendline.

Above scenario is depicted in the following chart. Stunning resemblance with prior sell-off in the beginning of the last year is highlighted.


click on chart to enlarge

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