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Google - There And Back Again... In Half The Time

Tyler Durden's picture





 

A peculiar side-effect of the current low-volume rise market dynamic can be seen by the curious price (and volume) action in investing public darling Google. When the market was climbing in the low volume days since November, the stock grew from $531 to a peak of $626 in 42 days, on average volume of 2.02 million shares per day. Then, when the selling started, the volume picked up by more than 100%, with daily average volume of 4.7 million shares, while the decline in the stock to the onset price of $531 took less than half the time, or 19 days. Such are the vagaries of the VWAP unwind, as algorithms seek to reverse to a longer and longer mean. Google demonstrates very accurately what would happen to the stock market should there be a real, exogenous selling catalyst. Now consider that the S&P's VWAP since the March lows is around the 950 level. If the market is unable to sustain the most recent relief rally, and if this is coupled with geopolitical news or a default the PIIGS or some other unpredictable event, expect a very prompt but highly doable correction. If the market volume doubled and the time of decline was cut in half relative to the rise, consider what would happen if all mutual funds suddenly switched from a buying to a selling posture... And what this would mean for the final closing level on the S&P of that particular D-Day.

 


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Wed, 02/03/2010 - 21:58 | Link to Comment Gubbmint Cheese
Gubbmint Cheese's picture

stock markets go down? Since when?

/snark

Wed, 02/03/2010 - 22:03 | Link to Comment john_connor
john_connor's picture

SnP 950?  That sounds about right for approx. 2-3 weeks from now.

Thu, 02/04/2010 - 01:51 | Link to Comment Master Bates
Master Bates's picture

I have a little bit longer of a timeline than that, but I agree for the most part. 

Thu, 02/04/2010 - 01:51 | Link to Comment Master Bates
Master Bates's picture

I have a little bit longer of a timeline than that, but I agree for the most part.  I'd s

Thu, 02/04/2010 - 01:51 | Link to Comment Master Bates
Master Bates's picture

I have a little bit longer of a timeline than that, but I agree for the most part.  I'd say

Thu, 02/04/2010 - 01:51 | Link to Comment Master Bates
Master Bates's picture

I have a little bit longer of a timeline than that, but I agree for the most part.  I'd say 4-5

Thu, 02/04/2010 - 01:51 | Link to Comment Master Bates
Master Bates's picture

I have a little bit longer of a timeline than that, but I agree for the most part.  I'd say 4-5 weeks.

Thu, 02/04/2010 - 22:57 | Link to Comment Anonymous
Wed, 02/03/2010 - 22:09 | Link to Comment Chopshop
Chopshop's picture

Gurgle is the NDX linebacker to crAAPLe's wide receiver .... goog leads the way for aaple's uber out-sized NDX weighting (c. 18%) to follow-through.

goog's slide is, in part, part of the practical application of portfolio mgmt.

aside from selling tech in the 3rd week of Jan (as a rule) ... goog / aapl et cet pull back almost whenever 'we' have materials / infra / ag / energy patch 2-3 day upticks to help smooth VOLD, ADD and basic measures of aggregate confluence that institutional allocators are monitoring.

markets / basket orders are massaged so much more than even ZH would believe, imho.

great look, TD & nice Fibo time extension too.

Wed, 02/03/2010 - 22:30 | Link to Comment Anonymous
Wed, 02/03/2010 - 22:35 | Link to Comment Anonymous
Wed, 02/03/2010 - 22:36 | Link to Comment Instant Karma
Instant Karma's picture

Hope so. Shorted the relief rally today. Short silver too.

Thu, 02/04/2010 - 01:53 | Link to Comment Master Bates
Master Bates's picture

D'oh!  I'm sorry, but I think that you'll have a little bit further to the upside before the next leg down starts.
The 50 day ema on the S&P is about 1113 or so if I remember correctly.  I think that we'll be in wave C of the correction until that point, before the leg down.
I have a target for the S&P bounce at 1110-1115, but my original target was somewhere around 1107.  Either way, I think we'll be up more tomorrow and into Friday.

Wed, 02/03/2010 - 23:01 | Link to Comment phaesed
phaesed's picture

Been awhile since you did TA publicly TD, interesting :)

I have to agree though, the market is rolling over hard, I thought we would bounce to 113, might not make it... take a look at ritch bitch handbags (a.k.a. Coach COH)...

 

Looks like the strippers aren't getting the johns to buy shit now that the housewives have a tighter grip on the household finances.

 

Also, check Larry Williams Ireallytrade.com website, excellent free analysis on Google's cyclical setups.

Wed, 02/03/2010 - 23:44 | Link to Comment Chopshop
Chopshop's picture

L dub webcast (and maybe interview?) coming in a few weeks, courtesy of the MTA.

Wed, 02/03/2010 - 23:23 | Link to Comment the grateful un...
the grateful unemployed's picture

so low volume is the Weapon of the Bulls. let's debunk urban stock market myth #1, if you can leverage your favorite stock higher with $1 worth of buying, why spend $2 or $3?? so what is to keep the sellers out, a constant (government) sponsored bid on the underlying.

 

ever wonder what happened to the stock vigilantes? just like their counterparts they learned not to fight the FED.

Wed, 02/03/2010 - 23:38 | Link to Comment walküre
walküre's picture

How does the selling of close to 2.5 billion worth of GOOG by 2 insiders factor into the price decline?

Wed, 02/03/2010 - 23:55 | Link to Comment Anonymous
Thu, 02/04/2010 - 00:03 | Link to Comment Psquared
Psquared's picture

A little off-topic but it occurred to me what "moral hazzard" really means. If Google invested in risky businesses, stocks and bonds and they fail who gives a flip. They fucked up they go down.

But if JP Morgan takes a risky MBS position and buys a CDS from AIG to cover them in case they lose, but AIG doesn't have the money/reserves to cover the CDS contract, and JPM knows this but they wanted to flip the CDS to Goldman for a profit, so when the bond goes belly up and AIG can't pay JP Morgan goes to the Treasury or Fed. Res. and says we need 100 billion or we will take the entire economy down with us -- that is moral hazzard.

Commercial banks simply cannot be allowed to engage in high risk trading of their capital. They are a special breed and must be tightly regulated. It is not a function of free market economics to create a trading environment in which the public is on the hook for the losses. It is so simple sometimes I want to scream "why don't you people in Washington do something ... it is obvious as the nose on your face!"

The reason, of course, is that Banks have the most well funded and organized lobby in Washington, DC. They like the fact that they can bet "our lives" via their prop trading machinery and simply yell, "fire" and get bailed out. It is welfare for the rich and as long as the money flows from their lobbyists to our legislators greedy little palms it won't change. No, not even if our populist president gives nice speeches chastizing the banksters for that very same "moral hazzard."

Sorry.... my rant is over.

Thu, 02/04/2010 - 00:31 | Link to Comment Anonymous
Thu, 02/04/2010 - 00:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"There and Back Again" by Dildo Faggins

Shorting is the game homies.  Google vs. China was a setup.  Toyota mismanaging this ongoing recall was a setup.  They needed reasons to get their DOELARRS out of the market while the doelarr was strong, and then you know where it is going?  You know what the oligarchs are doing with their DOELARRS?  They are buying GOLD.

Thu, 02/04/2010 - 02:00 | Link to Comment Master Bates
Master Bates's picture

And why would they purchase an asset that is about to decline?  Mmmmm?

Thu, 02/04/2010 - 00:28 | Link to Comment ZeroPower
ZeroPower's picture

See what happens tomorrow i suppose. GOOGs been quite contra-market the past few days, was flat or barely up with the 2-day runup and today closed higher on a less than attractive market close.

Ultimately none of this matters in the long run.

Thu, 02/04/2010 - 00:59 | Link to Comment Hephasteus
Hephasteus's picture

I'm arresting this vwap algorythm for killing time and damaging eternity.

Thu, 02/04/2010 - 01:08 | Link to Comment Anonymous
Thu, 02/04/2010 - 01:58 | Link to Comment Master Bates
Master Bates's picture

We've always seen declines in about half the time that we've seen advances.  It's the nature of market psychology.

When the trend is up, people are more cautious and have time to think about whether they really want to get in or not.  It's a more gentle slope.

When prices are down, and people get caught long, they want to be the first to take profits because greed and fear set in.  Thus, people have a tendency to get out a lot faster than they get in.
The google action is typical of any up/down action.

Also, between you and me, I believe that the S&P will correct further to the upside tomorrow, and maybe even Friday.  I have 1110-1115 as the final target for the bounce before the further downside starts.
Today's action was the b wave of an a-b-c corrective pattern, with Monday and Tuesday being the a wave.  We'll see another c wave upward before further decline starts.

Of course, Cramer was playing bear killer today, after he was spooked and telling everybody to sell Friday.  Is that guy ever right?  What an idiot...

Thu, 02/04/2010 - 03:28 | Link to Comment John McCloy
John McCloy's picture

On a side not I am fairly certain Cramer reads Zero Hedge because a day ago a poster on here mentioned the Keynes quote, " When the facts change I change my mind"

And that is how he lead of his show this evening so beware folks he is now using ZH and crew for material.

Thu, 02/04/2010 - 08:34 | Link to Comment Anonymous
Thu, 02/04/2010 - 13:30 | Link to Comment Anonymous
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