GOOG: Short Squeeze

From yesterday on GOOG:

"In the interim, downside targets of 390.86 and 368.42 are IN PLAY. The math for the H&S Top target is at the top of the chart."

The Rising Wedge target of 490.86 got MADE on the gap down opening yesterday morning. From the "Ye Olde Knuckle-biter" high of 547.05 five sessions ago, GOOG was down over 60 points at the early session low off the Smackdown from the retest failure of the broken Rising Wedge.

That isn't a reason to go knife-catching, but it's been fairly one-sided in favor of The Bears, so I was looking to see if The Bulls could come up with anything from which to launch a countertrend rally or a short squeeze.

This Ascending Triangle (in white) with a "nested" Falling Channel (in yellow) looked real decent. I liked the fact that the low of the Channel held above the ascending line. I got long 1,000 shares at 489.50.

When The Channel broke out, that put 492.82 IN PLAY.

490.36 (high of the pattern) - 486.42 (low) = 3.94 points of upside on a breakout.
488.88 (breakout) + 3.94 = Target: 492.82 IN PLAY

An Ascending Triangle breakout would put a target of 497.47 IN PLAY.

490.36 (high) - 483.25 (low) = 7.11 points of upside on a breakout.
490.36 + 7.11 = Target: 497.47 IN PLAY




"Nested" patterns and multiple patterns tend to pack some punch when they breakout, but if it's a breakout against the dominant trend, it's a good idea to reduce expectations. Targets against the dominant trend are less likely to get MADE.

Ascending Triangle breakouts in a bearish trend, or at the end of a bullish trend, often "morph," or change, into Bearish Rising Wedges/Channels. I sold the 1,000 shares in the 493.50's, between the two targets, to defend against the possible morph (pattern in red). I wasn't looking for much since I was playing against the trend.



The pattern did morph into a Rising Channel (in white), which subsequently broke down, putting a target of 479.15 IN PLAY.

494.18 (high) - 483.25 = 10.93 points of downside on a breakdown at 490.08.
490.08 - 10.93 = Target: 479.15, IN PLAY.

I wanted it short at 490.25 (white arrow), playing it for a retest failure at the bottom of the broken Rising Channel, but "they" wouldn't let me have it. When GOOG moved down to new post-breakdown low, I cancelled the order and called it a day.



The Bulls made one more rally attempt to retest the bottom of the broken Channel (white arrow), got to 492.31, then The Bears tanked it to a session low of 480.60, about a point and a half above the 479.15 target that was IN PLAY, then...

...WHOA!!!

The Bulls popped open their cans of spinach and said, "That's all we can stands...we can't stands no more!" LOL.

Good lesson on not to be rigid about targets. They're "ballpark/what we're aiming for," not anything precise or guaranteed. For that reason, we want to have a mental stop in mind so that we don't get squeezed half to death like some shorts likely did in yesterday afternoon's late day upside Screamer.

The horizontal red lines are suggestions of "logical stops" on a short trade. As GOOG tanked to the 480.25 low, shorts can ratchet down their stops to the preceding high, as the stock made each new low on the move down. That was a classic, relentless, 20 point short squeeze. Yeeks.

Market lesson for the shorts: "Know when to fold 'em."



Key Resistance overhead is roughly 509-515. That's:

1. The top of the bearishly inverted EMA's (exponential moving averages)
2. The broken neckline of the H&S Top
3. The gap from September 30th.

Anything above that is "Ye Olde Knuckle-biter" for The Bears, like we had on the September 27 "One Day Wonder" close, back above the broken Rising Wedge.



Gain: $4,000