Sunday, April 5, 2009

Is EWT predicting GOOG will miss Earnings?

... .......

IS?, its a question. Not a statement or prediction.

For the disclosure/record, goog was my fav short during 2008, and it did VERY well for me, very well.

Yet the 1 time i shorted it in 2009, i was stopped out (ie lost money).

Reason i mention that part, is to disclosure that I do feel its extremely overvalued, and the multiple is that of a GROWTH stock in a bull market. (valuations are never a reason to make short term trades anyway, but they do admittedly make me LOOK into charting a stock, for entries to get short or long, depending on its relative valuation to the market, etc)

I'll say one thing I know for sure, there are some stocks that I call "cult" stocks, you know what i'm referring too, the ones EVERYONE "falls in love with" goog, rimm, aapl, even gs, pot even".

The same ones that Joe Bob Smith "invested" a lil in back a few YEARS back, so well ya can't tell Joe Bob his stock is over-valued, b/c well Joe Bob purchased at IPO he make one heck of a trade, there's no debating that (.....for now).

Big tech seems to follow the cult theme the most, b/c people actually DO buy aapl stock b/c they "love their ipods", and they can relate to it in that sence, and just seems like "THE thing to invest in, etc etc". That's the same reason to me, that cult stocks have the sickest ralliest, and also the nastiest falls. Because they have such a heavy "common retail investor" baseline, that LOVES to chase the rallies, and also LOVES to overpanic and oversell as well.

Point to that, is that "cult" stocks...when they rally...THEY FRIGGING RALLY, and when they crack, BOY do they friggin crack. Ya do remember RIMM was 140, then they "missed" in sept 08, and nosedived to like 40. (no wonder it was Cramer's "stock of the month for Aug" alert, red alert)

Well rimm was smart (imo), they also LOWERED guidance too when they missed, so they REALLY tanked. But that also got all the bad news and put it all out there and kinda got it over with too.
(no wonder they blew out earnings this time!! they put the bar way down there, from last time)

BTW GOOG does not give it's own guidance, fyi. One of the rare companies that just lets the analysts pick that, they says its "irrelevant" to the company, etc.

At any rate, I just wanted to disclose that i do have a "bearish opinion" of GOOG's stock price, that's all. Some of that due to the factual numbers, some partially also due to probably "falling in love" with how well the puts treated me in 2008, over and over again. So i wanted to disclose that, so it's evident the author has a bearish opinion. (which also makes it NOT the best stock for me to trade, b/c of that too)

So on the the EWT, something i am not an expert at, but i do dabble in and slowly adding that to my t/a skill set. As the EWT traders i follow (kenny, daneric, tiny) have been very accurate on the market, and once 804 on the spx was breached, it sure does look like they said it would if that did happen, etc.

Geez, where's the point...ok the point is when i look at EWT, and the waves, and its classic presentations, every time i look at this GOOG weekly chart i think "wow, this looks just like the book". So i figured id bring it up, to get some feedback and education as well.

And if this count is correct. (i mean looking at the chart, i don't see how there could BE a different count!!!). And assuming that if goog BEATS ER, its probably means it would send it at least temporally OVER 412 (which would violate ewt, correct?)

Gaming earnings is a terrible trade, probably the WORST in the book. (I have learned from experience, the best way). But with RIMM beating, and goog actually had their EPS raised once within the past 30 days. (fyi....last qtr goog was lowered significantly right before the earnings, like the last 2 weeks before the earnings, they kept getting lowered every other day), i have a hunch that people are assuming goog blows out, and that's mostly baked in here to it's current price.

(even though i think goog has alot more DOWNside than upside, i'm gonna run a may straddle on it, for full disclosure, b/c again when "cult" stocks move they friggin MOVE, enough to where either side will likely go well over 100%, paying for the entire spread + profits)

So......does this EWT correct????

b/c it sure looks "pure" to me
i know EWT traders have "alternate" wave counts, and most of the time when i look at their "alternate counts", they look plausable, and i can see how either fits the pattern.

But probably ya cant tell me, that goog has an alternate pattern, other than THAT chart to me it looks like that chart is about the prettiest wave structure i have ever seen"

ALT1: even tho the primary count looks 100X more pure to me, i did 2 alternates
this one is an ABC correction, so if A=C, target is 425

ALT2: Anything over 395 violates this basically, seems highly unlikely.

If goog breaks 412.11, its has a free ticket to likely 425 (per ABC, alt1)
If goog breaks 395, alt 2 is void, b/c wave 3 can not be the shortest
(alt 2 seems very unlikely to me, b/c of the weak wave 3)

If goog fails to break over 381, its not EITHER alternate pattern, which suggests
its the Primary count, and has already topped on wave 4, and now heading
into wave 5 (below 247)

TIA for any/all feedback elliott wavers....i did the alternate charts to look as non bias as i can, and BOTH alternate counts look to me like 1000X a stretch, as compared to the primary count.
So hence the Topic Thread Title....


  1. I hate GOOG the company, so I naturally hate GOOG the stock. I think it's tremendously overvalued, always did, even in the 600s. I just can't bring myself to understand that valuation - ever. Heck, I almost refuse to "Google" things on the web and mostly stick to Yahoo as my search engine. I will say that Google Earth and Google Maps are pretty good, but that's about it, certainly not worth 300+ on a stock ticker though.

    Good luck with it either way. Just wanted you to know there's at least one other anti-GOOG person in the known universe.

  2. erik, do you think no korea launch will send markets plunging monday

  3. I think the OBV is telling; RSI equally unimpressive. Given that the rallies have consisted of big gap ups with minimal retracements, one would have to assume that MM's are technically short right now as well.(accounts for days when financials are flat,MM's accum. for next run)but still think they will retrace much of the financial rally to square their books. IF markets do not make a sizeable retracement now, the fall when it comes will be awful. CPC at close to levels of previous tops. COT report shows big commercials closed out longs on Tuesday and are heavily net short. If
    GOOG doesn't drop immediately, you could see a nice pop and drop. LA

  4. It looks to me GOOG and SPX mirror each other in a lot of ways.So if I am right in saying this we should have a pullback before earnings (when ever they are) and as spx corrects in wave 2 of p2 then GOOG spikes on earnings and goog will be in wave 3 of p2 as SPX will go higher in wave3 of p2.We shall see.Durrell

  5. As expensive as you think GOOG is, what about BIDU? Yes BIDU is technically growing faster than GOOG, but the PE and PEG ratios are much higher. I think that BIDU is a much better short near $200 than GOOG is at the moment.

  6. Hey Erik, when I looked at your first chart I immediately said to myself, you have the count wrong and that wave 5 was actually the end of wave 3. But you have that scenario in your third chart and I think that looks right. So my guess is your 3rd chart is more accurate.

    That said, I think GOOG is on a bull run here. It is all about earnings. They had a small layoff but are also still doing some hiring. I think it is all a gamble with GOOG so I think the straddle is the right thing today although premiums will be sick.

  7. Beamer....check out this read on options and implied volitility.

  8. Might be the coolest post I have read this year. Very well done.

  9. I don't know what the actual count is as I would have to spend an awfully large amount of time going over intraday charts to study the structure. I will tell you this: Your Alt: 2 labeling is impossible as wave 4 goes into the territory of wave 1. This is a rule breaker. So junk this one immediately.

  10. Thanks for the feedback

    I dont know why i even posted Alt2 (i didn't catch that 4 into 1 when looking obviously)...felt like a stretch even making it, besides even not catching that.

    I dont know ewt near anything like kenny, but ya can see why the chart caught my attention so much.