Tag Archives: GOOG – Google

AMZN Chart

AMZN Trade Considerations

A super smart friend said to me today, “tell me what you think about buying AMZN, because a sensible friend of mine, said the following, blah, blah, blah”.  “Hmm”, I thought.

Lets say, Jim Cramer or another guest friend says you should buy a stock for XYZ reason, you can be sure within 4 days you’ll have another (or easily find another) friend, who firmly suggests that you don’t buy that same stock, for a whole other set of reasons. Both might be ‘right’. If you watch CNBC, you have friends, though rarely as smart as mine… See the parallel yet?

Remember consensus is rare, short lived, and dangerous. Except in Apple’s case, and maybe Amazon’s… Hmm, if this wasn’t a super smart friend I’d say, “run away”.

In any case we all look at the same charts, events, and time-frames, some with more clarity than others. By looking at the AMZN chart over the last year, I can point out some obvious elements which might help you, my virtual friend, manage an entry. You want to buy AMZN because you believe in their product, management, track record, positioning, gossip, etc. The reasons the market ‘intended’, and armed with a little knowledge…

But before you look at the chart below, KNOW that we’re entering earnings season. Amazon releases after the close 1/31/12 (still unconfirmed). This raises the likelihood that AMZN will move strongly one way or the other in the near future, if GOOG is any example (down 8% after hours tonight), I’d avoid going ‘all in’ before the 31st. Spread out your investment so you won’t completely miss the potential earnings gap up and can balance things out or bail if we get a gap down. Amazon will be watched closely, and it’s likely to over react in one direction or the other.

Now for the chart:

AMZN Chart

AMZN looks like it’s turning up off the low end of the range, breaking through the 50 day MA and approaching the 200 day MA (which could act as resistance). This is positive, but bad results from GOOG after hours yesterday, might weigh heavily in the short term. We’ll see.

Notice also the high RSI, this is getting into overbought territory (dangerous), though the MACD is still trending upwards (positive) – slightly contradictory signals here… Think CNBC.

Another indicator which speaks to sentiment is the call put ratio. In Amazon’s case you have an optimistic ratio. Today, 1.5:1 for example. Options are trading with positive expectations.

If I was going to imagine a stock investment here, even considering the chart’s and indicator optimism, I’d look for a bounce off the 200 day MA, a pull back and a small entry between 180/185 ish, before earnings.  Add some after earnings if AMZN doesn’t tank. 175 ish is a good stop-loss if you manage to get in between 180-185. Do this… Set a stop-loss when you make the trade.

If AMZN breaks under 175 after earnings, I’d reconsider completely, watch for 160 and start over. AMZN is a fund darling it’s unlikely to fall of a cliff but weirder things have happened.

Good Trading!


Spinning the Weekend

With about 2 hours before the beginning of the end of the week, here in Europe we’re down about 3%. The Euro is consolidating around 1.43 and vacationers are dribbling back into Paris. After yesterday’s list of bad news, today is likely to be calmer – though options expire today, so I’m curious how the VIX presents itself. I’m cleaning out of my expiring option positions today. USO, SPY, FSLR.

Yesterday’s rout of HPQ had to be the craziest, most complicated manipulation of an earnings announcement I’ve seen. I’m guessing they put weeks of effort into this strategy… Or someone completely screwed up… I’d like to know which!

  1. Leak to Bloomberg at noon (Bloomberg falls all over itself for about 3 hours…)
  2. Trading Stopped – confusion
  3. Autonomy confirms leaked rumors – Autonomy trades under AU (Gold…) in the UK and stock jumps 45%
  4. Trading stopped again – more confusion
  5. Earnings are released early.
  6. Stock jumps 3 points for about 10 minutes
  7. Stock starts falling and doesn’t stop… HPQ will open down 12% this morning.
I was thinking about selling straddles at the close, but didn’t get the chance.
Obviously some changes are being made and strategies revised at our favorite tech companies. GOOG is buying Motorola Mobility, CSCO is laying off and starting to re-focus on core competencies and AAPL is surfing the content/platform wave. Extrapolate a bit and we’re seeing “Software Companies” like Google, Microsoft and Facebook preparing to go after Apple, Hewlet Packard and Dell. “Hardware Companies” are desperately trying to get in on the party.
This is a fundamental shift. Eventually we’ll stop referring to them as hardware and software companies, but with words like platform, infrastructure, and service. They might one day be considered conglomerates like TYCO and GE. MSFT is well on it’s way IBM is almost there, but markets will take some time to get used to innovators turning into conglomerates. The markets are just starting to digest this shift. These conglomerates will outsource innovation and start to pay dividends.
I’m going to get lunch, more later!

Google for Breakfast

Google’s purchase of Motorola Mobililty was a nice surprise today. It’s a pure Android play which will eventually push Apple back to it’s traditional 10% market share. I’ve followed Apple for decades, their innovation is inspiring and their products define markets. Unfortunately, Apple hasn’t managed to treat it’s birth defect, “Paranoid Monopolistic Tendancy” (PMD). PMD will soon be entering it’s most critical, third and advanced phase. During this phase margins will remain high, talking-heads will continue proselytizing their products and retail investors/funds will continue “pushing” their products. Leaders will depart (or write biographys) and advertising agencies will go into full spin mode. PMD is not terminal. We’ve seen Apple go into remission before, but the heady days for Apple are “nearly” over.

Now that Apple’s PMD has been made public and in light of Google’s recent purchase (and frankly it’s also recent development of Android) lets look over to Europe. (Keep in mind Microsoft’s drawn out battles with the EU…) Google suffers an airborne virus here, though admittedly not suffering PMD, it has a desease equally difficult to treat. The EU, already unhappy with big American companies forcing it’s memory eating, feature laden, browsers on innocent web users, has been embarassed with funny looking roaming camera cars mapping the lives of innocent villagers going about their daily lives. These unidentified rolling objects (URO’s) spy on innocent unemployed bread buyers, lovers sneaking off to their mistresses, and even illegal immigrants.

Google’s virus is orally transmitted through untreated political transfusion. And as we’re seeing on both sides of the Atlantic the popularity of political transfusion (read brinkmanship) has followed the gold curve. Might Google be offering European politicians the excuse at distraction they have been waiting for? My guess, is yes.

All that might be obvious, but what strikes me is Google’s reported purchase of Motorola Mobility is the single ONLY good news I see moving the markets today! It has moved them well, I have no regrets with a few long swing positions, though rest sceptical that our favorite handicapped brands ($AAPL, $GOOG), will alone lift debt laden, short limiting Europe and the politically inept off the proverbial floor!

Macro vs. Micro

Playing this market recently has come down to two problems: debt (macro) vs. earnings (micro). On the earnings front, you’ve a lot to follow, even in a down market. Finding strong cash flow, strong balance sheets, small/mid/large cap hasn’t been so difficult. The issue is unemployment and the ongoing macro problems keeping a lid on the continued release of positive earnings.

If you read this blog you’ll know that I’m distracted by technology stocks.

Any good news on the debt (macro) front is going to boost this market. That’s the prevailing sense and logically, good news should boost the market. We’ve waited so long now that the pop will be a good one. The truth is good news could come from either the US or Europe. That news doesn’t even need to be ‘super good’, just ‘decent’. Whether it is valid/real or not is another discussion… It probably won’t be, but that’s for traders with a longer term vision than mine. The reality is that the US will have an easier time releasing decent news and sooner (or later) the Republicans will get off their high horse. I’m embarrassed with that debate. But again it’ll be ‘easier’ for the US to lead the markets here. The EU is turning in circles and it’s the summer… Here’s a good graphic explaining the risk of banking and trade contagion. (The Washington Post)

So what should you trade in this market? Fundamentally, any good news will have a stronger positive effect than normal. Earning plays are working very well now. I’d watch option volumes closely before earnings and play long straddles. WYNN was hot today and is a good example. GOOG was another last week. Three stocks that release tomorrow after the close: AAPL, VMW, and YHOO would be good ones to consider. YHOO though is seeing lots of short interest. Be careful. The run up in AAPL today gives you an idea of expectations. I’m staying away from Financials which are being strongly effected by the worldwide macro worries but playing SLV and GLD in response.

Vacation WYNN and GOOG

The big trade yesterday was $GOOG . Up 12.77% ($67.50) to 596. There was a nice option trade with 1000, 580 calls passing. That trade netted over $1,000,000 today. The calls were way underpriced at about 10% premium… Yesterday, I was thinking there was so much positive expectation, that I’d stay away (or go contrarion…)

I’m still watching $SLV and $WYNN, both for different reasons: $SLV is seeing buyers return with uncertainty, $WYNN is overbought. The $WYNN options are expensive but it seems to be bumping up against strong resistance at 160. If you’re bearish or hoping for some pullback, one possibility would be a Aug 155/145 Put Vertical for about $3.00. Break even at 152. Earnings are July 18th.

Trade well. I’m enjoying a vacation… 🙂

The 4th of July Lottery Option Setup

You’re at a party – or a backyard barbecue – someone will eventually ask you: “So what do you do?” Hmm. Eventually you’ll have to come up with a good answer. A good friend of mine and the author of this book, always says. “I’m a documentary film actor.” I’ve yet to come up with a better response…

If you’re courageous enough to reply, “I’m a trader”, I have an idea to help you get out of the follow up question. There will be one surely, because 75% of your neighbors will believe either; 1) you have a gambling problem or 2) it’s your fault their mortgage is under water and they will want to know which.

Follow up with this question: “Do you play the lottery?” There’s a 2 in 3 chance they say yes, and a 1 in 3 chance they believe it’s the only way to be financially secure in life. Really.

You have exactly 1 in 1,120,529,256 chances of winning a lottery with 6 numbers (if you can choose between 1-99). Webmath is a good site if you want to do the lottery math…

Lets say you’re a real lottery fan and play 10 dollars a day for 1 year, we’ll say 200 days. That’s 2000 dollars and each day you play your chances are the same 1 in 1,120,529,256. (You might try this arguement with smokers as well…)

If once a year, lets say 2 days before your 4th of July picnic… You buy 2000 dollars worth of high beta stock options. Let’s say $GOOG, that would have been 4 contracts of the 500 Calls on Thursday. Remember you bought these calls in simple anticipation of this conversation… Your chances would have been 1 in 2.475436 that you’ll come home with something better than you left with. Though, in this case if you will have switched out beer for champagne. Now your neighbors will really be curious… Maybe they’ll even leave 10 dollars a day with you?

You only have to figure out how to convince your neighbor that you have nothing to do with his mortgage.

Google Consideration…

Since nobody is sending me an invitation for Google+ I’m working on a couple ideas. I’ve been watching $GOOG bounce off their lows at 475 and over the last few days move up to 505.

Taking the highs of June 1st and the lows of June 27th we’re sitting at 50% and bumping up against a 200 day EMA (which for some reason doesn’t show up on the image).

The longer term trend is still downward though.

Butterfly 490/505/520


Put Ratio Spread 2:1 490/510

The second option appeals to me because of the longer term trend. Let me know what you think.