This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

How to Capture Google's Volatility -- and Profit

NEW YORK (TheStreet) -- Yes, capturing Google's (GOOG) (GOOGL - Get Report) volatility is possible. It just requires striking when the time is right according to technical indicators.

Google is a momentum stock whose parabolic bubble popped after setting a split-adjusted all-time intraday high at $615.04 on Feb. 26. After breaking below its 50-day simple moving average on March 24, the downside for the stock gained negative momentum. It traded as low as $530.53 on April 7, for a high-to-low decline of 13.7%.

This wide trading range pre-earnings is reason enough for investors to attempt to capture a portion of this volatile range, both before and after Google reported their quarterly results.

On April 14, I wrote "Google Wants to Follow You Around the Mall," which included a pre-earnings profile for the stock. Investors who were betting on a positive reaction to earnings could have bought the stock at this week's value level at $536.08 on April 15, as Google traded as low as $530.64 that day.

The reason for buying at $536.08 was to capture the upside to our quarterly risky level at $562.40. That risky level was tested before the earnings release on Wednesday. Capturing this 4.9% before taking the post-earnings risk was the prudent strategy based upon our "buy-and-trade" levels.

Google reported earnings per share of $6.27, but missed analysts' estimates by 14 cents, with a miss on the revenue line. The stock plunged to as low as $524.89 after the closing bell. Investors interested in buying weakness had the opportunity to begin to buy at the weekly value level at $536.08.

Capturing volatility is best accomplished using GTC (good until cancelled) limit orders to buy weakness to a value level and to sell strength to a risky level.

The daily chart for Google is neutral, with the stock above its 200-day simple moving average at $514.75. It's below its 21-day and 50-day SMAs at $561.85 and $584.84. The daily slow stochastic, our measure of short-term momentum, is rising. That indicates that the stock should stay above its 2014 low at $530.53.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
GOOG $548.00 -0.73%
GOOGL $554.70 -1.15%
AAPL $124.43 -1.54%
FB $82.22 -1.18%
TSLA $188.77 -0.94%

Markets

DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs