Tuesday, September 25, 2012

GOOG Coming Along Better Than Expected

I thought GOOG's process would take longer to start effecting longer term charts and maybe wouldn't at all on a first move, but within a day it has moved to longer term charts that don't usually move in a day. I posted an earlier update of GOOG today in which the 10 min chart was the longest to go negative, although the extreme nature of the divergences in the charts from 1-10 mins said quite a bit.

As a reminder, GOOG is important fora few reasons, 1) A potential low risk/high probability short trade 2) A market leader that can offer us just as much information about the market as some of the market averages and 3) I have mentioned numerous times now that there is some evidence that the market's response to QE3 may be a surprise to all, instead of being either a risk on where most risk asset stocks rise or a risk off where most risk assets fall together, there have been some signs of bifurcation in which it's kind of an extreme version of a stock picker's market. If #3 is true, it's going to chew up most retail traders as they can't judge risk on or off and don't know what stocks or Industry groups to target, it would be an advantage for us. I can elaborate more on why, but we'll wait until we have a better view of the probabilities.

In the last update I mentioned the probability of GOOG turning lateral and choppy,  I also said the same yesterday, not to expect a "V" shaped reversal and not to rush in to the position, it's likely to be volatile as well in that chop; that has started to take shape. GOOG isn't looking good.

 GOOG made a very parabolic move on the way up (daily chart) so I suspect that it will not make as large of a rounding reversal, parabolic moves have tighter reversals, but still not "V" reversals. As you can see in the white box, the lateral chop I warned we'd likely see has developed, it is now starting to break down from that chop, but I wouldn't be reckless and I would say you should still expect choppy volatility. If you phased in to an entry today, it was likely a good move with a potential stop very close.

 The 1 min chart shows the deterioration in GOOG today, it also shows just enough 3C activity (I wouldn't call it positive, but neutral) to maintain that lateral consolidation, this is often where the divergences get worse.

 2 min chart is leading negative.

 3 min chart has the same leading negative, but a little 3C support to halt the slide and keep GOOG lateral instead of down.

 The longer 5 min chart has a more important signal which looked really bad yesterday, today it looks much worse at a new leading negative low.

 The 10 min chart is leading negative as well, this is where the negative divergences were held up at, that changed today.

 a 15 min chart is making a lower low in 3C which is leading negative, it's even worse now since the capture.

Even a 30 min chart is leading negative at a lower 3C low, this too has grown worse since the capture about 10 minutes ago.


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