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5 Facebook Sympathy Trades From the Tech Sector

Stocks in this article: FB GOOG TRI ADBE MSFT STX


First up is Google (GOOG), a stock that can't escape comparisons with Facebook. The social network is set to unseat Google's spot as the biggest internet IPO in history when its shares finally go public tonight. But Google has some worthwhile action going on in its stock chart. That's why traders should be paying attention to the symmetrical triangle forming in shares.

A symmetrical triangle is a pattern that's formed by two trend lines that are converging at the same rate. Typically, it's a continuation pattern, which means that it's a sideways move that's effectively a pause while traders absorb a previous move in a stock before continuing in the same direction. Since Google's last big directional push was up from its October lows, a continuation would mean more upside for GOOG. The buy signal comes when shares break out above that upper trend line.

>>10 Stocks Poised to Rise in Apple's Wake

Symmetrical triangles are also sometimes called "coils" -- and that's a pretty good way to explain how they behave. That's because as the pattern progresses, Google is getting its volatility squeezed. And since volatility is cyclical, that means that the breakout from a symmetrical triangle is likely to be a fast, volatile move.

Traders should keep an eye on that trend line resistance line if they want an early warning that GOOG is a high probability trade.

As of the most recently reported quarter, Google was one of the top holdings of Steven Cohen's SAC Capital and also shows up in Maverick Capital's portfolio.

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