GOOG reported earnings after the closing gong and was trading higher, in the low $590's last evening. We'll see if it holds up in regular hours. That puts GOOG up $110 off the Stifel Nicolaus downgrade low of $480 on the morning of October 4, at which time GOOG double-bottom in the intraday chart, at 480...480 (see last week's posts on GOOG).
A few observations on the daily chart, which would apply to ANY chart:
(1) When GOOG broke down below the Rising Wedge, then CLOSED back inside the wedge on September 27, that presented "Ye Olde Knuckle-biter" to The Bears. The high in that session was 547.05. The candle was a "possible" Bearish Inverted Hangman, if The Bears could knock GOOG out of the Rising Wedge and take the stock down again.
The Bears were successful, and "Ye Olde Knuckle-biter" inside the Rising Wedge turned out to be a "One Day Wonder." GOOG went down and the 490.86 target got MADE, but the 486.82 target did not. Strategy-wise, if The Bears took "at least 'some' profits when the 490,86 target got MADE," they did alright if they covered the next "Ye Olde Knuckle-biter," which was much more than a "One Day Wonder," as we can see.
(2) The October 7 close was just slightly inside the broken neckline. The Gap Up opening in the next session of ten dollars, to $525, was well inside the broken H&S Top and was a HUGE warning to The Bears. On a gap up like that, the inclination of The Bears is to "hope" for a Gap and Crap, and for a chance to cover their shorts at a lower price. The Bears got a pullback of less than two dollars, then GOOG powered higher and closed near the high of the session, at 537.17. UH-OH for The Bears.
(3) When a H&S Top gets broken to the downside, a move back above the neckline is a warning to The Bears ("Ye Olde Knuckle-biter"), a move above the Right Shoulder high is another warning, and a takeout of the high of The Head is yet another warning because, as long as the stock trades above the high of The Head, the measured move from The Head to the neckline is IN PLAY on the upside! Yeeks.
Eyeballing it, the target looks to be roughly 604.00 IN PLAY, as long as GOOG trades above the 558.52 high of The Head.
And, speaking of "Ye Olde Knuckle-biter"...
... From yesterday morning on GS:
"We knew from this chart yesterday morning that Trendline #2-#4 at the top of the Bullish Wolfe Wave (or Falling Wedge) came in at 96.34. Since it's declining, it isn't good enough for GS just to hold above it, but rather, we want to see "former resistance act as support" on any retest, then see the stock move higher.
A nominal dip below that trendline is fine, but then it should move to the upside."
After all of the nice chart work that The Bulls constructed in Wednesday's session, The Bears managed to gap GS down at the open and send the stock back for another retest of the top of the Wolfe Wave/Falling Wedge, which came in yesterday at 95.60.
I wasn't real fond of a second retest, but since The Bulls were holding steady in the 95.50's and above (horizontal white line), I went ahead and bought 1,000 GS at 95.57. The top of the Wolfe Wave/Falling Wedge didn't hold up, as support. The Bears knocked GS down below 95.00, which was more than just a nominal (in name only) break of 95.60. I was holding "Ye Olde Knuckle-biter." UGH. I threw it in on the next rally, at 95.20.
GS put in a low at 94.52, then formed and broke out of this Cup & Handle. It also was back above the 95.60 top of the Wolfe Wave/Falling Wedge, but I didn't like the fact that it had gone a dollar below it on the selloff to 94.52. The Bulls "done me wrong," so I passed on the breakout. LOL.
Sloppy...sloppy...sloppy.
After the upside breakout, The Bulls got thrown back inside The Handle, then they rallied, then they got sent back inside The Handle again. Yeesh.
The pattern in orange is a "possible" H&S Top. The Bulls managed to morph TWO of those into Falling Wedge upside breakouts on Tuesday and Wednesday, so they could do the same here, but they'd better look sharp.
As I've said many times, Falling Wedge breakouts are my least favorite of the pattern breakouts, and this is a good illustration of why. Technically, GS still is broken out on a closing basis, but it theoretically could continue to "walk down" the upper trendline...down...down...down, but still would be broken out.
Wolfe Wave breakouts are "supposed to" result in very sharp moves to the upside, toward the target line (Black #6). We got a bit of that on Wednesday's breakout to 101.13, but yesterday's perfomance from The Bulls was dismal.
An earnings beat could propel GS to the target. They're due out October 18, I believe. Check me on that.
Loss: $400
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