Last night we got lucky with Google Inc. (GOOG) earnings, but it was an extremely attractive opportunity to take a small options play with expiration coming today. It was a fairly low-risk proposition and for the first time I can remember I got lucky with an earnings play. Google Inc. (GOOG) handily beat street consensus estimates at $0.72 vs $0.69 expected, topping already lofty expectations for this quarter. The reports allays fears that Google Inc. (GOOG) has not been spending its cash reserves wisely, hiring and acquiring recklessly without getting sufficient value. It feels good to get lucky every once in a while, but that is not how we make consistent money in the market. We make a living by being disciplined and patient, waiting for low-risk high percentage set-ups and being prudent with entries and exits.
The Google Inc. (GOOG) news boosted the broader markets after hours as well. This rally has exceeded our targets, and as rallies extend you start to get involvement from more sectors. You get a nice rotation, but you must take even more care as some scenarios are an accident waiting to happen. Yesterday the market came under some pressure, but held S&P 1165, the prior break out which usually turns into support. This is why I never stick around for the “big move”, especially from the short side as of late.
I got stopped out of Bank of America Corporation (BAC) yesterday at 12.90. The banks have lagged for the last few quarters, so trying to trade them for a laggard play became a bit painful. The Bank of America Corporation (BAC) still may have broken the descending channel to the upside if it were not for the foreclosure news, which some experts estimate could lead to a $59 billion foreclosure liability for Bank of America Corporation (BAC) alone.
High beta tech stocks are still acting healthy, and just got a shot of adrenaline with Google Inc. (GOOG) yesterday. The good news with Google Inc. (GOOG) had a residual effect, with fellow leader Apple Inc. (AAPL) pushing to new highs. Also, Amazon.com, Inc. (AMZN) and Baidu, Inc. (BIDU) look like they are re-setting up for new high trades. Keep an special eye on Baidu, Inc. (BIDU) which was also up after hours based on good earnings for a fellow search giant.
We’ve entered the market of the “have’s and have not’s”, and it is up to us to figure out who is who on a daily and weekly basis. Don’t get greedy up here, and make sure you are employing a very stock specific strategy. Keep tight stops to avoid giving back gains we have locked in on the way up. We will continue with a ‘buy the dip’ mindset, and Google Inc. (GOOG) earnings might have been that extra push this market needed into the elections and possibly year-end.
See previous Google posts on the T3Live blog:
Google (GOOG) More Than Just Search – Oct. 5, 2010
Google (GOOG) Is A Value Play – Sept. 17, 2010
