Nasdaq Opens Strong as Google Smashes Expectations

Nasdaq Opens Strong as Google Smashes Expectations
July 19, 2015

 
The NASDAQ opened in record territory after Google unveiled earnings that smashed investor expectations. As a consequence their share price surged.

Hopes are now that other similar companies in tech are going to top estimates as both Microsoft and well as IBM are due to release their earnings.

The results were mainly driven by much higher than expected Youtube revenues, and it seems that the sky’s the limit for NASDAQ:GOOG shares as it managed to close on Friday at no less than 672$/share – an increase of more than 16%(!) from prior the earning.

What next for Google? Is there still room to move to the upside? I would say yes but not from current levels and below are the reasons for this.

Google is clearly one of the main players in this Internet era that changed the way society works. It managed to diversify in different areas, taking advantage of the fact it had a horde of cash at its disposal for many years.

As a result, the Internet giant has a lot of projects and new businesses under its umbrella, and this may be viewed as them stepping away from their core business model of search (as some analysts implied). However, recent surge in Youtube revenues shows that the core business at Google brings in a lot of revenue.

From a technical point of view things are looking even more interesting as the recent break above the $650/share makes highs that are coming in after a long consolidation period. This means that we are looking at a break higher, most likely in an impulsive fashion and this means a continuation. However, even impulsive waves have two corrections of a lower degree, and I would step in to buy call options on the Google shares on any dip to the 635$-640$ area, as that is seen as a Fibonacci support moving forward.

The drawback may come with the Federal Reserve of the United States hiking rates as they have been saying all over again, and this should not be welcomed by the stock market.

All in all, rate hike or not, by the time our area of interest is reached, call options are recommended with end of month expiration date or even one month expiration if the broker you’re trading with offers this kind of expiration date.

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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