Look at Google (GOOGL) tomorrow morning. Will that pop be your trade before the drop? This video explains. (July 23, 2015)
Lets look at Google ( NASDAQ:GOOGL ). The stock is up after hours, it’s on whopping volume, this is massive volume, hmm, maybe not, basically no volume at all. In my view the reason it’s up after hours is because the QQQ is up after hours. And why is the QQQ up after hours? Mostly because of Amazon (NASDAQ:AMZN ), this is volume. The stock is gapped up huge and is now trading off just a bit. Tomorrow morning is going to be impressive, really impressive, and it’s going to pull a lot of stocks up with it.
However, lets get back to Google ( NASDAQ:GOOGL ), this stock is broken and I think that any rally tomorrow morning, frankly, will be an opportunity to get short by either selling calls or buying puts. There’s any number of ways to trade this in options, but the bottom line is this, everybody that bought in this box here, they’re losing money right now with the way this stock closed. It drifted lower today, I posted an article on “Stock and Option Market Mentor” and I actually went over to “Real Money” on that too.
I mentioned that this one, intraday, was looking really sloppy. The way this thing was trading yesterday, you can look at it on the daily chart, this is just a tombstone doji, looks brutal, like that’s finally the top. And then the way the stock was trading today, it just kept drifting lower, and lower, and lower. My line in the sand was, and I mentioned this in the article, 680.00. If the stock starts drifting below 680.00, we were short before that, but if the stock starts falling below 680.00 that is a key support level. Why is that? Well, once again, it’s support; this is basically right where support is and so if the stock starts falling below there everybody’s a loser.
Now, I’m expressly not saying that this is going to fill the gap. Somebody asked me about that on the website and I said you’ll see some technicians look at a gap and say, “Oh it’s got to be filled.” I’ve heard some of those technicians, I see them on the tube and I don’t respect any of them because all gaps don’t have to be filled. Don’t believe me? Go back and look at Amazon (NASDAQ:AMZN ), back in the last century, there are some folks that are still waiting for that gap to be filled so they can cover their shorts. This gap does not have to be filled, but what I’m saying is this isn’t even the gap, this is the gap, so the stock is already kind of wading in here.
Now what my suggestion on this is, be committed to your short. I don’t think there’s going to be enough demand to drive this stock up to new highs before the stock falls back a little bit. Is it going to fall back to there? No, they had awesome earnings; the tech sector is getting some money coming into it. Where else are folks going to put their money? Gold stocks? You know, that’s for William Devane.
So the bottom line is, be short this. If the stock comes up tomorrow morning this is when you can initiate a short if you’re not short already. Let the stock roll over, let it prove to you that it’s going lower. An easy way to do that, because we’re all about easy here, the close was 674.73, now the low was below that, 671.00, right? Wait till the stock falls back below the close here of 674.73, that’s the easy way, you can short it into strength. But trust me, when you’re looking at this kind of stock and you’re shorting it down here, you’re still shorting it into strength.
The stock is deadly strong; you look at the weekly chart though. Do you really feel like buying the stock right now, at 674.73 on this kind of move? I don’t. So I think this is going to get real drifty and can fall down multiple 10-point levels. I am already there on the short side and I will be increasing that position tomorrow morning; I hope that you’re going to be there too.
Free Chart