November 27 - Google Trade Watch

One of my favourite stocks for short-term trades has to be Google. Over the past couple of months this stock has had an amazing run up following the market's rally. However, in the recent months it has run away from the market and has started a steeper upward slope. The plot below shows a weekly chart of GOOG with my technical annotations and trend lines.

My counter-trend analysis tells me to watch for a possible break of the recent buying frenzy. Technical signs point to a possible slow down of buyers as volume has steadily declined over the past two months. The RSI is in over-bought position above the 70 line. The MACD is keeping steady and not providing any signals yet, but I would watch for a cross of the faster line over the slower (black line over red).

The daily chart below, shows a more granular detail and possible signals to initiate a short.


I will look to either initiate a short position in the stock or sell near-the-money calls on Google as the trend breaks.