Considering A GOOG Position

Over the last several days there's been some ugly underlying action in GOOG whereas before it had been confirming the move up very well.

This is just a consideration, but in a sense, GOOG does remind me of the short entry in BIDU that worked out very well. BIDU had shown trouble in underlying trade and looked as if it were ready to break out. We prepared to short BIDU on a breakout so long as the underlying trade kept looking bad or worse, it did and the BIDU short (actually 2) were both very successful. The second BIDU add-to short had a similar event in which we shorted it on a false breakout as the underlying trade was deteriorating.

I can't predict the future of GOOG's price action, I can tell you there's trouble in the underlying trade and the set up thus far reminds me of several we have seen and traded successfully with an excellent price entry, very low risk and high probabilities.

Just so it's out there, here's the concept.

 Monday (orange) is not only where trouble showed up, but it was quite ugly, Tuesday was even worse (red).

 The 5 min chart which is all post F_O_M_C shows not only a relative divergence, but the leading negative this week.

 The 15 min chart which had been confirming on the upside also is deteriorating, that makes the situation mroe serious as the 5 min migrates to a 15 min chart.

 Now even the 30 and 60 are starting to show trouble as the 30 min makes a new 3C lower low which hasn't happened in this trend.

 On a daily chart, these parabolic moves are exciting, but study enough tops and you'll see that almost all of them start with an increased ROC on the upside or parabolic moves up, volatility grows and that tends to be a warning sign of a top coming. Since GOOG has made a very parabolic move, I'd expect any reversal to be more "U" shaped and not the longer inverted "W" shape, in other words, I'd expect it to top and decline faster than if it hadn't made such a parabolic move up.

Here's a potential trigger as a fairly large triangle develops with weakness in 3C charts, with BIDU we waited fro an upside breakout from a triangle and shorter that. If this triangle holds up, that is one scenario I'd watch for as technical traders will expect this to be a consolidation/continuation triangle and will almost certainly buy the breakout, creating demand for mart money to short in to.

That's a scenario, it may not be the correct one, but as of now it looks likely enough to warrant some price alerts just above the upper triangle resistance trendline.