Google Overbought

20 окт. 2013 г.

SHORT-TERM TRADE:Google's price had made an new all-time high, but the RSI is at the highest it has been in a year, 77. In the past, when the RSI hit 77 it has falling back. The all-time high is way above the upper envelope's line, when Google's stock price touches or rises above this line it has an correction and falls to the moving average. With such a high move Friday the next y, the stock is overbought and will experience a pull back in the next couple of days. Since the buyers have all bought, now those who want to take some profits out of the table will sell making a correction. You should short it now and have a target 1005 or 1000, depending on your risk level. Your stop loss should be between 1017 to 1023.

MEDIUM-TERM TRADE: The TRIX and the MACD both are falling meaning an divergence is happening. This means an medium-term pullback is around the corner. Since Google is above 10000, some will take profits off the table. Fundamentally, if earnings disappoint investors this would put selling pressure on Google, and Google is usually correlated with the S&P 500 (too many charts to show Correlation coefficient on this idea). You should short Google at this level and have a target between 930 to 945. Your stop loss should be 1030 to 1040.