Google Stock Quote

This is probably the most important message I can post about trading Google stock - or any stock for that matter.

Prior to yesterday’s price action, GOOG looked like it was starting a new rally. Then the news hit. If I recall correctly, someone downgraded the stock or came out with some bad news about Google.

Whatever the news is, it doesn’t matter.

What does matter is how you dealt with it.

Personally, I am long the stock at a lower price and have no plans to unload my shares for just about any reason. The shares I own are an “investment".

Trader’s on the other hand, would likely have exited a long position on yesterday’s open. I’m talking about real traders, the ones who have been in this game long enough to realize when to fold.

Now it’s easy to say that doing so was not the right thing to do. Look how the stock rallied higher.

Just keep thinking that way as your trading account dwindles down to nothing.

gap down

The 30 minute chart for Google’s stock chart shows the stock possibly reversing to the upside late this afternoon at the 62% Fibonacci retracement.

mini reversal

If the stock is reversing, the first resistance level (the obvious level) is the recent highs near $200. If the stock takes out that price level, then $208 is next.

How did I come up with that level … well, let’s just wait and see if the stock gets there, then I’ll explain.

That’s right, Google put in a reversal bar to the upside, on big volume no less.

The volume is not surprising given that approximately 177 million shares became available for trading. Today’s volume was more than 3 times the average daily volume.

reversal to the upside

Since announcing earnings this past week, Google stock has spent the rest of the week “consolidating” the stock price appreciation.

That’s a polite way of saying the stock has traded down.

On the surface, this might appear as a negative for the company’s stock. The stock gaps up to new highs and fails to follow through.

But who can blame people for wanting to bank some profits on this big winner? Besides, aren’t shares becoming available soon, i.e. - unlocked?

With that in mind, let’s look at the price action since the recent spike high.

My opinion is that the decline from the earnings announcement has been an orderly correction. Note that the first downswing (from the all time high to A) on the 15 minute chart is still greater than the recent downswing from B to C.

possible support

Based on Fibonacci retracements and projections, the $200.53 to $201.14 price range could be expected to act as support to further price drops. Often when two or more Fibonacci price targets overlap, price support (or resistance) can be strong.

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Now, if the stock price chops right through the Fibonacci support levels just mentioned, then I’ll be a little concerned.

And if the 50% retracement level gets taken out with ease … I’ll be reconsidering my position on this stock. But until then, this stock looks promising.

Google made a big “splash” with earning’s announcement.

As often happens when great news comes out, the stock made a large gap to the upside to a new all time high.

While the stock closed up respectively from yesterday’s closing price, the price action was less-than-impressive for the day (unless you sold short on the open!).

Google earnings

The linked chart shows the likely Fibonacci support levels based on the recent upswing. Coincidently, the 50% retracement is at yesterday’s high.

Here’s the facts:

Google reported that fourth-quarter profit rose to $204 million, up from $27.3 million in the year-ago period. On a per share basis that is an increase from $0.10 per share to $0.71 per share.

Those figures include compensation expenses and other charges.

Quarterly sales just about doubled from $512M to $1.032 billion.

Now the reality check:

The stock is up for the day, but down relative to the opening price at $215.02 ($204.50 as of 3:30PM eastern time). It’s likely that traders took advantage of the expected earnings strength and unloaded shares.

Let’s see where this stock finds support.