Ever wandered out into the badlands of trading? Here are some thoughts about Google (GOOGL). (January 29, 2015)
Lets look a Google ( NASDAQ:GOOGL ). They announced earnings after the bell; the revenue grew 15 percent in the fourth quarter, which sounds pretty smokin’ hot, but Wall Street was looking for more, right? It didn’t beat estimates but 15 percent is pretty good. Lets look at the after hours trading and I will explain to you why trading in the after hours market is generally really not a wise thing to do.
Initially the stock traded which way? Here’s 4:00, 27,000 shares traded, this a $500.00 stock, 27,000 shares after the market closes is kind of a big amount of money. Next one, 58,000 shares traded, so this is a lot of shares being traded. Sell it, sell it, sell it, they missed their earnings so you’ve got to sell it.
Well somebody comes in and says, “Well lets see about that”, and now the buying starts. So you’re shorting the stock after hours and you could say, “Well yes I shorted here and covered here, even down there”. That’s great, if you’re that guy, God bless you. But for a lot of people, most, you’re going to go trade after hours thinking you’re going to get a jump on the next day.
By the way, if you’re long Google ( NASDAQ:GOOGL ) going into earnings, what are you doing? You’re trading after hours, you’re going, “Oh my gosh, I’ve got to liquidate my position, I’ve got to get out of here”. So you’re the guy that sells at 490.00, right? The stock traded all the way down to 490.00, so you are holding the stock looking for the big move.
This is how the stock had traded during the day, this is a nice bullish hammer pattern after a nasty decline, “I’m going to buy this stock and get some money here”. They announce earnings, they’re disappointing, they missed revenues and you wind up being the guy that sells right down here at the lower Bollinger Band, right at 490.00. Then what happens? The stock moves up, now you don’t know what to do.
The point is this, decide why you’re owning a stock, and then only make your decisions, as far as what to do with it, during non-market hours; and then actually do what you’ve decided to do during market hours. If you can do that you’re going to wind up not selling low and buying high. You’re going to wind up keeping your head and that’s what we want to be doing, right?
So right now what are we doing here? We’ve got 540.00 is resistance here, I’d say 500.00 definitely here as support so we’re essentially right in the middle of the trading range with Google ( NASDAQ:GOOGL ). My goal for this video was basically just to alert you to how difficult it is to trade after hours, and how a lot of times you’re going to wind up doing now what you later decide you shouldn’t have been doing.
With all of that said, just watch 540.00 as resistance. Amazon ( NASDAQ:AMZN ) is another one that has gapped up after hours, that’s even kind of closer to resistance. Look for Google ( NASDAQ:GOOGL ), it’s up just 2 percent off of the close. Just be careful, I wouldn’t fade this, in other words don’t short this move because it’s a gap up; it’s only 2 percent.
If the stock starts moving up go ahead and buy it if you want. For me the lesson is just in what happens after hours, less that whether this is a trade tomorrow.
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