GOOG

I wanted to cover GOOG last night, but by the time I was done it was a 14 hour day and I was feeling a little burnt out. In any case, I want to establish a baseline with GOOG which missed on the top line, but beat on EPS last night.

At 3:55 I took a look at GOOG (I learned my lesson there as we did have what seemed to be an earnings leak in GOOG once (only once), it was a VERY clear signal and correct, but 15 minutes before the close/earnings.

In the post from yesterday at 3:55 my initial thoughts were this,

"I wouldn't say this is a leak, at least I haven't seen enough that would suggest it, but I would say the reaction within a day is negative in GOOG."

The post was short, but the point was I didn't think any downside or negative reaction in GOOG would be immediate, of course that still remains to be seen. The after hours environment for earnings was favorable as IBM posted a better beat than GOOG and IBM is performing that way today on a beta adjusted basis.

However I do want to establish a baseline of what I was looking at yesterday so we can see how GOOG reacts moving forward in the near term and whether there's an opportunity here. These charts are all backed up to yesterday at 4 p.m., there are some very short term signals that I wouldn't have seen toward the end of the day as I looked at GOOG about 15 minutes before the close.


The first half o rmaybe even 2/3rds of the charts establish a theme...

 This is a very long term daily chart back to 2006 with the 2007 top clear, the 2009 bottom and notably a lot of deterioration in to 2012-2013.

 The theme here can best be summarized with the above 4 hour chart, accumulation and a lot of it during the Q2 2012 area and then a pair of tops, both with negative divergences, the second worse than the first with a small accumulation area in between the two.

 Even the 30 min chart  shows the same theme.

 Looking closer at the two top areas, the 10 min chart shows the end part of the theme

 However closer inspection shows a smallish positive divergence very recently that sent prices higher. In my mind this isn't a big enough accumulation period to support any major move up, it doesn't look big enough that any major move up was expected, but some move up was expected. It's difficult to say whether the 5 point move from there was what this was about or about something a bit larger.

This is where the real question is as far as I'm concerned. If a large move that was sustainable was expected, I'd expect to see a larger accumulation area like we did on the first several charts, this is also why I didn't expect immediate downside in GOOG, but I also didn't and don't expect the upside here to last all that long based on what was in place before earnings.

So now you know where the key area to watch will be and the answer shouldn't take long, it may even provide a great opportunity.