Schaeffer's Market Observation Features Google.CINCINNATI -- Featured in today's Schaeffer's Market Observation is Google (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :GOOG GOOG Google, Inc. (stock symbol) ). This article is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. Take advantage of the timely Schaeffer commentaries by signing up for their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day and get entered to win an iPod Nano A flash-based digital music player from Apple, introduced in 2005. Like larger iPod models, the nano has a color screen. Although the nano name suggests ultra-small "nanotechnology," the iPod shuffle is actually smaller. See iPod. . http://www.schaeffersresearch.com/redirect.aspx?CODE=PROAW13M&PAGE=1 . You Want It? You Got It, Part II Great Google-y Moogly A Technical and Sentiment Analysis Sentiment analysis refers to a broad (definitionally challenged) area of natural language processing, computational linguistics and text mining. Generally speaking, it aims to determine the attitude of a speaker or a writer with respect to some topic. of Google (GOOG) Yesterday I waxed "poetically" about days of yore of old time; long ago; as, in times or days of yore. - Pope. See also: Yore when I would listen to the radio and hear all-request Fridays. I decided that I would look at some of the most requested Schaeffer's Equity Scorecards. After yesterday's news, I am not surprised to see Google (NASDAQ:GOOG) on our most requested Scorecards. So, let's take a look at the search engine. After the market closed yesterday, GOOG announced that it has agreed to acquire privately held YouTube for $1.65 billion in stock. YouTube is the top-rated video-sharing site on the Internet, and is single handedly responsible for productivity grinding grinding, process by which surface material is removed from an object, usually metal, by the abrasive action of a rotating wheel or a moving belt that contains abrasive grains. to a halt numerous times per day in offices across America. GOOG has agreed to allow YouTube to operate as a separate entity, let it keep all of its employees, and continue to work out of its offices in Silicon Valley. The deal is expected to close during the fourth quarter. The news was subject to the scrutiny of the brokerages this morning. J.P. Morgan reiterated its "overweight" rating on GOOG and noted that the deal would be a "strategic positive" for the search engine. Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. took issue with the purchase price, noting, "we expect investors to be excited by the strategic opportunities." However, the brokerage is "skeptical of the $1.65 billion price, given YouTube's early stages." Rumor RUMOR. A general public report of certain things, without any certainty as to their truth. 2. In general, rumor cannot be received in evidence, but when the question is whether such rumor existed, and not its truth or falsehood, then evidence of it may be given. has it that the new creation could be called GooTube . . . sometimes the puns just write themselves. Since we are looking at analyst comments, let's continue and take a look at GOOG's sentiment rundown Rundown A summary of the amount and prices of a serial bond issue that is still available for purchase. rundown A list of available bonds in a municipal issue of serial bonds. : * Percent of analysts tracked by Zacks who rate the stock with a "buy" or better: 95% * Number of analysts tracked by Zacks:20 * Short interest as a percent of float:3.13% * Short-interest ratio short-interest ratio A ratio that is used for market analysis and is calculated by dividing short interest by average daily volume. Technicians use the short-interest ratio as a tool to determine market direction. : 1.45 * Schaeffer's put/call open interest ratio (SOIR SOIR Schaeffer's Put/Call Open Interest Ratio SOIR Simultaneous Operations on Intersecting Runways ): 0.89 * SOIR percent rank: 82 The first aspect of this sentiment backdrop that grabs my attention is that the speculative options crowd is bearishly aligned. GOOG's Schaeffer's put/call open interest ratio (SOIR) of 0.89 is higher than 82 percent of those taken during the past 52 weeks. This actually surprised me a bit, as I assumed that the options crowd would be bullishly aligned toward this high flier. I guess I proved what happens when you assume. The rest of GOOG's sentiment backdrop lines up much the way I expected. Analysts are nearly wildly bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish toward the search firm. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Zacks, GOOG earns 13 "strong buy" ratings, six "buys," and a solitary "hold." This configuration leaves little room for upgrades, which could push the stock higher. In fact, there is little room for anything other than downgrades, which could push the stocks lower. If the shares are pushed lower, there is little in the way of potential short-covering support. Roughly three percent of GOOG's float is sold short, and it would take 1.5 days to buy back these shorted shares. Not only does this combination limit potential short-covering support, but it also lessens the opportunities for a short-covering rally to push the stock higher. So, GOOG receives a fair share of optimism, how is its technical performance? It seems that the stock may have found a bit of support in the form of the 400 level and its 10-month moving average. Maybe GOOG won't have to rely on any short-covering support, but will this dual layer of support withstand a slew of downgrades? We can only wait and see. What about the chance for the shares to move higher? There is always a chance for the stock to advance, but it does face its fair share of resistance. The 440 level is the first level that GOOG could find resistance. This level turned the shares away in April, and may be gearing up for a repeat performance. If this situation comes to fruition fru·i·tion n. 1. Realization of something desired or worked for; accomplishment: labor finally coming to fruition. 2. Enjoyment derived from use or possession. 3. , we could see a double-top formation. Will rejection at 440 spell disaster? I don't think so, as the 400 level could hold as support. Moreover, in order to fall to the 400 level, GOOG would have to lose the support of its 10-week and 20-week moving averages. I am not making a particularly bearish Bearish Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value. bearish or bullish argument here; maybe it is because I think we could be looking at a range-bound stock. If GOOG is in a trading range Trading Range The spread between the high and low prices traded during a period of time. Notes: When a stock breaks through or falls below its trading range after several days of trading in a range, it usually means there is momentum (positive or negative) building. , I would define the lower rail at the 360 level. If this is indeed the lower rail and the round-number 400 level doesn't hold, there is some distance for it to fall. I usually like taking some kind of stance, I am not a wishy-washy type of person. That said, GOOG earns a Schaeffer's Equity Scorecard score of 4.0 out of a possible 10. While this is a middle-of-the-road reading, I like to think it signals an excellent opportunity for a straddle In the stock and commodity markets, a strategy in options contracts consisting of an equal number of put options and call options on the same underlying share, index, or commodity future. position. If you are a big-price player and want to lay down the cash necessary to play a straddle on GOOG, take a look at the 430 or 440 strikes. Click the following link to see a Monthly Chart of GOOG Since August 2004 With 10-Month Moving Average and a Weekly Chart of GOOG Since January 2005 With 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=17517 . Take advantage of the timely Schaeffer commentaries by signing up for their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day and get entered to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROAW13M&PAGE=1 . About Schaeffer's Investment Research (www.SchaeffersResearch.com) Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method . |
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