Falling Friday: Giants GOOG and GS Plunge

Apr 16, 2010: 11:30 AM CST

In what can be described as the “music stopping” in a long round of musical chairs, the stock prices of Google (GOOG) and Goldman Sachs (GS) plunged Friday morning, shocking investors after both stocks had advanced in a seemingly endless rally.

Let’s take a quick look at both of these stocks’ daily charts to note the rise and fall.

First, Goldman Sachs:

Headline news recently broke (via the Wall Street Journal link here) that the SEC charged Goldman Sachs with fraud from transactions involving the sub-prime crisis.

This sent the stock plunging 13% (as of noon EST), erasing a month of steady gains in price.  Volume surged as price fell.

Next, Google:

In one of those extremely frustrating experiences for new (and even seasoned) investors, Google reported upbeat earnings but did not achieve the “whisper numbers” of analysts with their quarterly profit numbers.  Analysts also feared if Google could keep up the pace of profits into the future.  Despite reporting a stable profit, shares fell sharply overnight.

I wrote a post entitled “Why Might a Stock Fall on Good News?” which explains in part why a stock price might fall despite good (or perceived good) news.

Keep watching these stocks for any sign of an ‘oversold bounce’ or if price continues to slide.

The decline in these (and other) stocks have send the US Equity Markets down over 1% so far this morning.

These are breaking stories, so keep watching these stocks for any sign of an ‘oversold bounce’ or if price continues to slide.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

16 Comments

16 Responses to “Falling Friday: Giants GOOG and GS Plunge”

  1. John Hunter Says:

    It might be frustrating or you can take advantage of it and buy more. That is what I did with Google. Most of the time if the market behaves in a way you think is wrong either you can make money or you are wrong.

  2. Corey Rosenbloom, CMT Says:

    That's true!

    What I meant by frustrating is that the company produces excellent earnings and all seems well… but the stock falls hard anyway. It would seem like good news should produce higher prices, but that doesn't always happen. Markets look to the future and already have discounted the present.

    But that's a good point there!

  3. Dan de Man Says:

    Hey Corey. Thanks for the great article!

    This is one of the reasons I only trade ETFs. It only takes a couple of these hammerings to realize that the risk is too great. Check out the VIX today, wouldn't it have been nice to catch that wave.

    Cheers,
    Dan

  4. Corey Rosenbloom, CMT Says:

    Dan,

    Good point. I used to swing trade stocks back in the 2004-2006 period but then moved to sector ETFs then futures. So much easier to be in futures.

    Nice point about the VIX!

  5. liubros Says:

    it is not just google and goldman sacks falling. $vix is spiking. i am thinking the market is having more chances of going down further, like the falls in January.

  6. Corey Rosenbloom, CMT Says:

    True – I'll do a SPX update soon once things settle.

  7. bigmovingstock Says:

    GOOG and GS are both leaders – not good for the overall market moving forward imo

  8. c1cummin Says:

    It's looking a possible bear flag here on the SPY, no?

  9. John Hunter Says:

    It might be frustrating or you can take advantage of it and buy more. That is what I did with Google. Most of the time if the market behaves in a way you think is wrong either you can make money or you are wrong.

  10. Corey Rosenbloom, CMT Says:

    That's true!

    What I meant by frustrating is that the company produces excellent earnings and all seems well… but the stock falls hard anyway. It would seem like good news should produce higher prices, but that doesn't always happen. Markets look to the future and already have discounted the present.

    Goldman's news came out of the blue (at least in terms of fraud charges), but the selling/hedging is an issue that's been in the news for a while.

    But that's a good point there!

  11. Dan de Man Says:

    Hey Corey. Thanks for the great article!

    This is one of the reasons I only trade ETFs. It only takes a couple of these hammerings to realize that the risk is too great. Check out the VIX today, wouldn't it have been nice to catch that wave.

    Cheers,
    Dan

  12. Corey Rosenbloom, CMT Says:

    Dan,

    Good point. I used to swing trade stocks back in the 2004-2006 period but then moved to sector ETFs then futures. So much easier to be in futures.

    Nice point about the VIX!

  13. liubros Says:

    it is not just google and goldman sacks falling. $vix is spiking. i am thinking the market is having more chances of going down further, like the falls in January.

  14. Corey Rosenbloom, CMT Says:

    True – I'll do a SPX update soon once things settle.

  15. bigmovingstock Says:

    GOOG and GS are both leaders – not good for the overall market moving forward imo

  16. c1cummin Says:

    It's looking a possible bear flag here on the SPY, no?