10/31 Wednesday

This is a 1-2 days bearish trade setup after it has been broken out of this Pennant pattern and I am not sure how long it’s going to take to break out of that short-term consolidation.

Currently forming a bearish pennant continuation pattern.  You can spot these continuation pattern after a rally, many times a stock needs to rest so these continuation pattern forms.   And many times when they form, you can confirm them with declining volume as you can see in this chart.  Of course these patterns are not perfect and they could break upside but more than not they break in the direction of the recent trend which is bearish.

I have pretty tight bearish entry there and this trade is going to require close attention because we have 100 and 200SMA coming up very soon here.

(Fib Retracement measured from $767 – $570)

We are currently sitting on 50% retracement and my current target is at around $645 and depends on the price action, I might close it out after day or two or I might even hold it even longer but for now I am targeting for few days.  Because of these confluence zones here on the downside, I don’t want to hold too long.

I am expecting at least another huge bearish sell off at least one more day before a short-term bounce.  Market Indices are at it’s pivot as well forming a continuation pattern so if market starts to tank next few days, I can’t help to think that $GOOG will probably follow it.

100SMA (blue) could act as support which is just below my entry so definitely something to watch out. Also just below my 1st target we got 200SMA hanging around.  In the event that we break $645 level, I might think about holding to 200SMA level but I wouldn’t want to go any lower in this particular trade.

11/1 Thursday

(9:43am CT)

Obviously if any one of these triggers get triggered, it will be 1-2 days trading.

We can see that volume has been declining still and if we don’t get good volume spike followed by good upside move, I will have to concur that we are still forming a bearish continuation pattern (looks like bear flag today).  So I am leaning more towards to bearish side.

But if it breaks to the upside, I will be there to ride it as well but I am actually hoping it won’t because I am bearish on $GOOD at least for one more run.

(12:28pm CT)

(12:51pm CT) Canceling Bullish Trigger = LOW VOLUME

Bearish entry still remains

11/2 Friday

(10:56am CT) Entered Bearish @ $692.72

Risky trade here with high reward.  Below $670 is much safer but I thought I would get in with some Puts with a tight stop.

Here is the reason why I got in.

($COMPQ – NASDAQ daily chart)

You can see that Head and double right shoulders was confirmed and it tried to go back up and test the 2nd neckline. However it didn’t even t able to get up all the way to the resistance line before it started tanking today. We did gap up but bears just rushed in and took it over.

So looking at this index and the analysis, I am expecting more bearishness rolling in to the market next week so I got in pretty early on this $GOOG trade.  Again below $670 was a safer set up but I took the chance today thinking possibly I can get in early before next week.   If market rallies upwards before close, I will get stopped out quickly here.

Target $640

(After Close)

Looks like we are forming this very tight upward movement channel which also can be interpret as Bearish Flag.  Nonetheless it is a bearish consolidation format.  After a huge two days fall, it needs to compose itself and rest and that’s exactly what it’s doing right now.

Some might perceive that this is bottoming it out to go bullish and in technical terms, that is not true.  Volume must confirm everything and we still have this declining volume even though $GOOG seems to be trading higher.

*Take a look at last July. You can see that stock slightly went up and volume just jumped with it, that how you would analyze if stock is ready to move to a upside. Volume must confirm the move and currently we don’t have the volume to confirm that bullish move.  So only logical conclusion is this is a bearish flag and its a bearish continuation pattern.

I like when the consolidation takes a while because then the fall is that much harder.

Good friend at ST asked a question today about $GOOG and I want to point it out because he spotted bearish engulfing on a monthly chart.  This is very important as we look into the broad perspective on $GOOG.

(Monthly Chart)

As you can see here we’ve been in this long 3 years of triangle pattern and initially it broke out and it was heading higher but after the earnings it tanked again so we have long bullish candle and now with long bearish candle.

Yes the long bearish candle does engulf the previous candle but not by much… so I want to call it a Bearish Tweezer rather than a bearish engulfing.   Technically it is engulfing but the effect might not work as the same.  Usually we call it a engulfing pattern when we see a doji or a spinning top followed by a huge bearish candle so in this case they are pretty even size candles. But needless to say, it’s still a bearish signal.

Bearish Tweezer is not as strong as Bearish Engulfing but still gives us bearish sentiment.  But what I want to pay attention is that support area from the triangle pattern.  Currently $GOOG is sitting right on it and we would need that to be broken before going bearish.  I think if we can break below that with solid looking bearish candle, we can probably achieve $630 area or even $600.

One more thing to note here: when it broke out of this triangle pattern, volume was never there to support it which means it never had fuel to go higher.

so hey good find the monthly chart there SDmstrTrader, I am bearish on $GOOG and I am still holding my positions.  If we can break out of that bearish flag, next target is at around $640.  $670 must be broken first though.

11/4 Sunday

(Fib. Retracement Measured from $774 – $556)

50% retracement zone acted as support after this two days of crash and it started traveling upwards very slowly but got rejected at 38.2% retracement zone thus creating this Bearish Counter Attack candle pattern.  This reversal is not as strong reversal signal but I put lot of weight on it because it formed with bearish flag pattern.

They call it a Counter Attack because you can see that it gaped up on Friday morning but bears rushed in and the stock came down to Thursday’s open so it’s like bears counter attacked bulls.  Again the counter attack isn’t strong reversal pattern but it happened with bearish flag pattern and at 38.2% Fib. Retracement resistance zone so I would say its very significant this coming week.

$670-$660 area is going to a confluence zone (major pivot area) for me as I start to ride this thing to the downside.   My target is at around $630 area but before we get there we must break $670-$660 area which I think it might be tough to do.  So I will be keeping my eye on that zone.

11/6 Tuesday

(9:15am CT)

$670 is next support and looks like we are breaking bear flag channel support there. $670 is a pivotal level for $GOOG as it was the area that it slowed down after a two days of crash so in the event that $670 is breached, I am looking at $660, $640 and $630.

11/7 Wednesday

(2:49pm CT) Closed Out My Positions @ $668.69

I wanted solid close below $670 with good spike of volume. We didn’t have any of that.

I don’t think we have enough fuel to push through the 100SMA which is just below today’s lower wick.  Satisfied with the return though.

Market sold off at the last min and so did $GOOG. Looking good for shorts but I was worrying about this 100SMA coming up here. That’s why I closed my positions but good luck if you are in with Puts or shorted.