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Google Inc - GOOG - close: 181.35 chg: -3.85 stop: 185.01

Company Description:
Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program provides businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with offices throughout North America, Europe, and Asia. (source: company website)

Why We Like It:
This one is for the thrill seekers. GOOG has been very volatile the last couple of months, which is great if you're on the right side of the trade but potentially account-busting if you're not. Unfortunately, picking your entry point can be challenging. However, we believe that GOOG is on the verge of a significant breakdown. This is purely a technical play and given the weakness in the NASDAQ and the INX Internet index GOOG probably won't get any help from either. Looking more closely at GOOG you can see that shares have broken their three-month trendline of support dating back to the November low. Today's decline broke below the simple 100-dma and its short-term oscillators are bearish. Also noteworthy is that GOOG currently sits just above round-number, psychological support at the $180.00 mark and its P&F chart is on the verge of a new sell signal. It will take a move under $180.00 to produce that P&F sell signal so that is where we will put our TRIGGER to buy puts. The entry point will be $179.49. More conservative traders (probably shouldn't play GOOG) but can watch for a new low under the January dip ($176). Our target is the $165.00 level but it wouldn't surprise us to see GOOG trade even lower although it's bound to have some support near $160. Remember this is a high-risk aggressive play and not suggested for all traders.

Suggested Options:
We're going to suggest the April puts.

BUY PUT APR 185 GOU-PQ OI=1722 current ask $12.60
BUY PUT APR 180 GOU-PP OI=2076 current ask $ 9.90
BUY PUT APR 175 GOU-PO OI=1857 current ask $ 6.00
BUY PUT APR 170 GOQ-PW OI=1710 current ask $5.00 *symbol change*


 

Picked on March xx at $xxx.xx <-- see TRIGGER
Change since picked: - 0.00
Earnings Date 02/01/05 (confirmed)
Average Daily Volume = 10.9 million

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Ishares Dow Jones US Energy - IYE - cls 76.25 chg: -2.35 stop: 80.01

Company Description:
This Ishares fund represents a sampling of various integrated oil and secondary oil-related companies.

Why We Like It:
Wow! Everyone knows that nothing goes up in a straight line but some of the energy stocks have been mistaken for the energizer bunny lately. Today we are finally beginning to see some weakness in the sector. The OIX index is breaking down below its simple 10-dma for the first time in weakness and on the verge of a new MACD sell signal. Meanwhile the OSX oil services index has already produced a new MACD sell signal from very overbought levels. Before we continue we want to state that we long-term bullish on oil and oil-related equities. However, the group is very overbought and due for a pull back. We want to try and catch a part of that pull back. Once the consolidation is over we'll be looking for new bullish entry points. Given today's decline in the oil sector several well know names in the group looked like tempting put candidates. We liked COP, CVX and XOM as some of the major players with very clear reversals. They are all breaking technical levels and volume was huge. Yet instead of picking just one stock and trying to capitalize on the move we thought it would be a good idea to buy puts on the Ishares and the OIH holders (see next play). The IYE has been climbing non-stop since its January lows with traders buying dips to the simple 10-dma. The IYE broke technical support at its 10-dma today on volume three times the average. Plus, the stock has produced a classic bearish engulfing candlestick, which is a reversal pattern. Technically IYE has also produced a new MACD sell signal from very overbought levels. We're looking for a quick drop and our target is the $72.00-71.00 range. More conservative traders can look for some confirmation (a.k.a. follow through) on today's reversal. Please note that normally we are against trying to call a top, especially in a sector that has been so strong. This makes this play higher-risk and more aggressive since we are speculating on a short-term pull back in a group that has investors looking to buy the dip. If you're not comfortable with what could be a quick play and a risky one at that then just sit out.

Suggested Options:
We are going to suggest the April puts.

BUY PUT APR 80 IYE-PP OI= 10 current ask $5.00
BUY PUT APR 75 IYE-PO OI=259 current ask $1.95
BUY PUT APR 70 IYE-PN OI= 60 current ask $0.65


 

Picked on March 09 at $ 76.25
Change since picked: - 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 124 thousand

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Oil Service Holders - OIH - close: 96.10 chg: -2.44 stop: 100.01

Company Description:
Similar to the Ishares, the OIH holders represents a basket of stocks in the oil service sector.

Why We Like It:
The oil sector has produced a very clear reversal pattern (see the IYE new play description for more details). Instead of picking just one equity to buy puts we're suggesting that readers consider buying puts on the OIH holders. The up trend is in jeopardy and its MACD indicator has produced a new sell signal on very strong volume. There isn't much difference between this play and the IYE play except the OIH holders are more focused on oil service stocks and its options have a lot more volume and thus liquidity although the reversal on the IYE looks a bit more dramatic. This remains a high-risk, aggressive play. We are long-term bullish on OIH and will plan to open bullish positions once the pull back is over. Right now we're just trying to capitalize on the overdue correction. Our target for the OIH is the $91.00-90.00 range.

Suggested Options:
We are suggesting the April puts.

BUY PUT APR 100 OIH-PT OI= 3610 current ask $6.40
BUY PUT APR 95 OIH-PS OI=16870 current ask $3.60
BUY PUT APR 90 OIH-PR OI= 9559 current ask $1.65


 

Picked on March 09 at $ 96.10
Change since picked: - 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume = 3.1 million

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