Why I'm Shorting Google

I am shorting Google (GOOG) with a 2.4% allocation for multiple technical reasons - I'll post a chart in an hour or so to explain why, but essentially you have a stock that is (a) butting right up against the 50 day moving average and (b) making a series of lower highs. If this trend continues right about "here" is where the 3rd lower high would be. I am in around $323.

While everyone loves the Nasdaq I find it hard to love a company in an economy where the top 2 advertisers are autos and financials. That said, I am happy to see my tax money splattered all over the internets in Citigroup (C) and Bank of America (BAC) ads.

Overall, I am about 65% cash as frankly I'm a bit exhausted from the market and its herky jerky ways. Some sideways action would do us all good - as I have been repeating for months, the market has been dominating the individual stocks so most "bets" are about daily market direction (far more difficult) rather than individual stock direction.

Disclosure: Short Google in fund and personal account

Comments

[Alex Filonov:]

Hm. Momentum shorting above 13 days MA? I wouldn't.

Mar 13 12:11 PM

[Echo To All:]

i see where ur getting at via the technicals. but unless this is a trade that will last a few days, do not take it.

1st... ur thesis is wrong. we do not know the breakup in ad dollars from financials and autos that is specific to goog. (On the web in general yes, but the general web does not correlate with ads that we can understand the ROI)

2nd... goog w/a 20.00 est 2009 eps (which represents zero growth from last year) would give the fastest growing company (whose innovation has not let up) a forward PE of 16. (16 for a stock that usually trades in the 20-30 range)

3rd... they can manipulate eps too well. they aready started putting ads on finance and other places I have not seen before. On top of this, their cost cutting does produce bottom line results. (they proved this last quarter.)

4th... if we are going to have a serious bear market rally (one that allows the SP500 to touch the 200sma), GOOG will retest 380 or even its weekly 50SMA.

simply put, this stock should not be in the 200s due to valuations, but it should not be in the well over 400 given the environment u argue.

Mar 13 12:30 PM

[PenName Dave:]

At what price do you plan to cover?

Mar 13 12:42 PM

[LA Tech:]

Google stock will never see the light of $400 per share...ever again.

One trick ponies never work after that pony catches a cold!

Mar 13 12:47 PM

[desicon:]

GOOG is no one trick pony. They pretty much cover the broadcast market. The new paradigm of broadcast media is internet not terrestrial. With strong presence in Internet, video (you tube) and voice (Google voice) they are leading the transformation that is in the cusp of taking of. Also, as cloud computing gets more traction they stand to gain.

Mar 13 02:54 PM

[TraderMark:]

Short term call...that's all. And a hedge against the market

they did not bring over my chart so if it starts to break north of say $340 I'll be out with a small loss.

Target is depending on how the market does, this is the type of stock that will be moving with the market to some degree....

Would be happy for $290s to $300 - just a quick scalp and some downside hedging in case the market retreats.

Mar 13 04:30 PM

[Tommy Charles:]

I understanding what u are saying about the technicals but I would not short google any time soon. Trading on technicals alone is a coin flip. It may blast through the MA with ease. I'm not so convinced that Google is going to be adversely effected by the recession. Companies still need to advertise, perhaps more so now than before, and if they do they are going to buy it from Google, trust me.

Mar 13 11:39 PM

[Augustus:]

I'm not sure about the effect on profits, but they are rolling out a new "product" called Google Voice. You might want to check that to see if there are going to be any earnings from it. It could result in a pretty useful application.

Mar 14 05:31 PM

[investor88:]

OK for a trade as Trader Mark has done with stop loss/sell stop.

Mar 15 04:59 AM

[Drew Arnold:]

I would be careful on this one. Momentum indicators are bullish on GOOG... Look for it to trade sideways against its 50 MA for several days and lose its momentum before it drops. I would wait a couple days to make the trade, there's no need to risk being stopped out by the momentum.

Mar 15 07:53 PM

[Contrarian ...:]

Here’s your suggested play: Sell Google short and use a point above the moving averages (like $340) as your stop loss to protect yourself.

<IMG SRC="www.contrarianprofits...." ALT="Steal Money from Google">

www.contrarianprofits....

Mar 17 12:01 PM