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Is Google (GOOG) Ready To Short?

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January 09, 2012 – Comments (0) | RELATED TICKERS: GOOGL

Google (GOOG) was downgraded this morning after an analyst at Stifel Nicolaus lowered their revenue and earnings estimates. While I don't consider the news to be important at all (any upgrade/downgrade is done for self-serving purposes, and never to actually warn us of anything), I am enamored by the price action where this stock is breaking a three month-old trend line with little in the way of support below.

I drew a Fibonacci Retracement level on the chart and from what I can see, this stock could very easily see much lower prices from here. While it would have to take on some heavy damage, I can see where this stock could go down to the 61.8% retracement level where there is plenty in the way of price support, before getting a legitimate bounce of any kind. The more likely destination though would be either the 38.2% or the 50% retracement. 

As far as staging an entry into this, I'd wait for a mild bounce of some kind, one that will take it back above $630, maybe even as high as $640, and then when the next shoe drops, you could very well gain anywhere between $40-$60/share. 

I'd give myself some room on the stop loss, looking at placing it somewhere around $665, and make it where its going to have to make some new highs before I get pushed out of my short positoin. 

Here the GOOG chart with Fibonacci

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