Are You Tuned into Channel Google (GOOG)?
Posted on Wednesday, February 4th, 2009 | In Market CommentaryIt still bewilders me just exactly how fast Google (GOOG) went from the “Yahoo Wanna-be” to the king of the search engine universe. When it comes to Google shares though, lately they’ve been down and out. But that doesn’t mean you can’t make money.
If you take a look at their chart, you’ll see a nice little chart formation called a trend channel.
A trend channel is nothing more than two trend lines – a resistance and support line – that form a “channel” that any given stocks price trades between.
Google’s trend channel began in late November. Every time Google hit the bottom of its trend channel, shares moved higher. And every time it hit the top of, prices would stall out and move lower.
As you can see, Google is now hitting the top of its trend line. Plus, both the Slow Stochastic indicator (under the chart) and the RSI indicator (above the chart) are showing shares as overbought (meaning sellers should flood the market).
One of the best ways to capitalize on this move is by simply buying a Put option which makes money as share prices drop. The move shouldn’t take more than ten days to complete.
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