GOOG is up to near all-time highs following its surprise restructure announcement last night.
Yesterday morning I mentioned that its OVI had sprung back to life, but I’d also said that in light of the market choppiness I’d stay out of it for now.
So the question is, could we have anticipated this surprise surge and been more aggressive? After all, we have a post-earnings gap-up and consolidation, and we had an OVI that had picked up noticably in the few days before.
I think you’d be a brave trader to have had a pop, particularly in light of last week’s bruising market action. Also GOOG’s post earnings consolidation wasn’t really as tight as we’d like, with the last two weeks’ prices being at the lower end of a wide island gap.
So the only clue really was the OVI, but even with that the news itself caught the market by surprise. However, there is something that we can identify.
In the lead up to earnings, GOOG was floundering both in price and OVI behaviour until the week before reporting. In the three days before earnings, GOOG’s OVI surged into big positive territory, and it’s done virtually exactly the same in the three days before this announcement, albeit this time without any clues from the stock price itself.
The lesson from this is that GOOG (or Alphabet as it will soon be known) is able to keep its business very secretive until the final days before a news event.
Statistically GOOG hasn’t always been the best correlator with its OVI, but even with that said, it has yielded subtle clues from time to time, and I expect will continue to do so moving forward.
The markets remain challenging and I still say stick to the lowest hanging fruit for the easiest opportunities.