Historical Moves On Google

Market Opinion: The market looks overbought, however the bulls believe that the strong unemployment numbers, Greek bailout and strong Apple (AAPL) earnings should ultimately lead us higher. If that is the case, then volatility ETN's VelocityShares Daily 2x VIX (TVIX) and iPath S&P 500 Short-Term VIX Futures (VXX) should continue their downtrend into future months.

If you're a bull then I encourage you took look at some bull put spreads on Big Lots (BIG) or bear call spreads on UltraShort Gold (GLL). Surprisingly, the overbought condition on the McClellan Oscillator has vanished. It seems as though last Friday's sell-off was the only down day we could get.

Google (GOOG)

Google recently disappointed investors by missing EPS estimates on January 19th. The stock fell nearly 10% after earnings and gapped down from the $640 to $585 level. As anticipated the stock nearly reached $560, which is where Google's 200 SMA was located and then buyers stepped in. Fundamentally, the company looks great with revenue growth intact and EPS numbers growing YoY despite the January miss. However, given the recent gap down on and the fact that I believe the Nasdaq is looking toppy I decided to check out the historical results on this stock for the Jan-Mar option expiration period.

Please note: the decimal is not shown in the returns data.

The data above does not look bullish for Google in the Jan-Mar option expiration timeframe. In fact, Google shows an average return of -8% since inception during this time period. Notice how the stock has only increased once during this time. This year could be different, as of Monday's closing price Google is up 4.47% since the January 2012 option expiration closing price. However, can we really expect to see the stock fly up past the $640 level where the stock gapped down? The market would probably have to continue rallying to give some tailwinds for Google to push through such resistance at $640. Given the seasonal techincals for Google, and my opinion of the market, I suggest the following trade for those interested.

Suggested Trade: GOOG - Sell Mar 17 655/660 call spread (Bear Call Spread)

(Sell 655 Call/Buy 660 Call)

Size - 5% of Giorgio's Corner Portfolio Size = (1 spread)

Entry: Sell Limit: 0.50

Stop Loss: 2.50

Exit Price: 0.00

Max Return: 11.11%

(Note: Return calculation does not include commission. Max Return is calculated as Return at Risk not Return on Margin.)

Disclosure: I do not own any investments in GOOG. I do own Feb'17 bear call spreads on QQQ. I'm short shares of VXX, TVIX, GLL, and ZSL. I own bear call spreads on SPY, VXX, GLL, and ZSL.

Charts are from Finviz.com. Earnings Data is from e*Trade.com.