(GOOG) is showing the same basic setup as many of the major stocks right now. The Daily charts of so many stocks are showing continuation BUY patterns. (GOOG) is showing this as well. It triggered a buy signal on the Daily chart around the 27th or 28th of May. Since then, it has behaved like everything else: it's up, it's down, it's up...etc. It has yet to reach its full potential up to the MOB on the Daily chart at a price of about 615.
The Weekly chart of (GOOG) however ALSO looks like most major stocks and indexes. There are so many weekly charts that look WEAK! Most of these charts, like Google, show a Stochastic continuation SELL setup. Also, many of them have a 50%-62% retracement on the same weekly chart. A 50%-62% retracement is Wave 2 behavior. We all know what comes after 2...
The Dow even shows this 50%-62% behavior after a Wave 5 high on the Weekly chart. Its current MOB support is showing at around 11000. However, if it behaves like a classic Wave 3 down, we could see prices in the 8000 range. (this is where 1.618 extension falls) Now, I'm not big on the doom and gloom scene, but this is a possibility. We need to be prepared for all the possibilities.
Be prepared!
nate mccartney
With GOOG as the weekly is showing a Stochastic continuation sell would it be unwise to trade the Daily Stochastic continuation buy? For example would it be better to trade a chart where there was a Stochastic continuation (sell or buy) on both the weekly & daily ie timeframes lining up.
Posted by: Anthony | June 14, 2008 at 06:05 AM
Anthony, it is not imperative to only take trades that show up the same on multiple time frames. However, if it does, it should be a strong signal. The price you pay in only taking these trades is that you will be a MUCH less active trader. In this particular example, the MOB on the Daily chart is not out of reach. The entry on the trade has already passed, however. If it DOES reach the MOB, it will still be in bounds of a typical Wave 2 on the Weekly chart, as the MOB is right at .618 retracement. I hope that is helpful
nate
Posted by: Nate McCartney | June 14, 2008 at 10:47 AM