shorting GOOG, SPG

Google jumped 20% Friday on its earnings report, closing just below $540 vs. Thursday's close near $450. We feel the stock is overvalued and more importantly history teaches us that it is extremely rare for a massive price gap such as this one to not be closed in fairly short order.

Factor also the major gains in the general markets the past few days to which there is normally a reaction. Further, with Google's earnings announcement behind us and the current earnings season just getting underway in earnest, we believe it unlikely that there will emerge unexpected good news to propel this company's shares even higher in the near term. The wind is not currently at this stock's back, in our estimation.

While we remain bearish the overall markets, in the case of shorting Google we attempt a short-term speculation from which we'd consider profits greater than 5% to represent significant gains. Whether the trade goes for or against us, we are unlikely to be involved for long.

We'd prefer not to see it trade above $550 but note that there is trend resistance circa $565 so we'd likely only cover for a loss if the stock is closing above that level which would make a roughly 5% loss, thus the risk minimal with appropriate stops in mind.


We also short SPG, Simon Property Group, which closed Friday at $102.48 We view this more as a fundamental trade which we'll stay involved in unless the stock begins to close at all-time highs above circa $125 or we perceive significantly better fundamentals in the U.S. economy and in particular in U.S. consumer debt and the retail sector.

As stated above, we remain general market bears and would likely turn to a neutral stance if the DJIA starts to close above 13000 - not much higher than it is now.

In the case of the specific melieu of SPG however, this linked posting and the links contained within it outline the reasons for our bearishness clearly given that, per SPG's Yahoo! Finance profile, "Simon Property Group Inc., a real estate investment trust (REIT), engages in the ownership, development, and management of retail real estate properties. Its real estate properties consist primarily of regional malls, Premium Outlet centers, The Mills, and community/lifestyle centers. As of December 31, 2007, the company owned or held an interest in 320 income-producing properties in the United States, which consisted of 168 regional malls, 38 Premium Outlet centers, 67 community/lifestyle centers, 37 properties acquired in the Mills acquisition, and 10 other shopping centers or outlet centers in 41 states and Puerto Rico."

Simon Property Group announces its earnings on April 29.



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