Sunday, June 27, 2010

Google Testing 2010 Low (Chart)

GOOG


Motorola Droid X: Unveiled June 23, Available July 15


Overview
Google at 472.68 once again has not only dropped below the benchmark $500 price but is just above the 2010 YTD low of 472.05. Google is down -5.47% for the week, down -2.67% for the month, down a dismal -23.76% for the year, and up +62.49% since the March 9, 2009 market bottom. This equates to -$27.35 for the week, -$12.95 for the month, a painful -$147.30 for the year, and +$181.79 since the March 9, 2009 market bottom. GOOG is down -24.58% or -$154.07 from the 2010 YTD high, of 626.75 on January 4.

By comparison, the overall market, the S&P 500, is down -3.65% for the week, down -1.16% for the month, down -3.44% for the year, up +59.16% since the March 9, 2009 market bottom, and down -11.54% from the 2010 YTD high on April 23. So, GOOG has been under-performing the market in 2010 yet still has outperformed the market since the March 9, 2009 market bottom.

A second Death Cross occurred on June 4, the 100 day simple moving average crossed below the 200 day simple moving average. Previously, the 50 day simple moving average crossed below the 200 day simple moving average - the Death Cross or Black Cross, on May 25. GOOG YTD closing low was on Friday, May 21 at 472.05, although this low is currently being tested and was also tested on June 9 with a 474.02 close. Google's short-term operating performance has been very good. Of course, it's the long-term outlook, with investors concerned about the possible (probable?) loss of the Chinese market and what will be the second significant revenue stream for Google.

Google News and Fundamentals
A review and update of Google news and fundamental analysis is in the previous post. A review and weekly update of USA and World market and economic news and fundamental analysis is here. Sentiment is "cautiously optimistic" about the global recovery. Asia-Pacific is the most robust economic region while there is uncertainty about Europe's sovereign debt, financial system, and economic recovery. USA leading economic indicators are signalling the recovery is slowing down, perhaps even stalling. USA unemployment and underemployment remains high, bank lending continues to contract, housing starts have plunged, durable goods orders are down, and the Q1 GDP was unexpectedly revised downwards. Yet USA manufacturing shows surprising strength and sustainability.

Google Daily Chart
Below is the GOOG daily chart for 2010. A monthly chart is included at the bottom of this page for a broader perspective.

Noteworthy Closing Prices on Daily Chart Below:
Current $472.68 (Yellow horizontal line)
2010 YTD 1-4-10 High $626.75
2010 YTD 5-21-10 Low $472.05
YE 12-31-09 $619.98
10 Month EMA $506.97


GOOG Testing 2010 Low

Intermediate-Term Trend
The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, flipped to an intermediate-term bear market on Tuesday, May 4. That is, the 25d sma is now less than the 50d sma. The market pullback, Flash Crash, and general malaise of GOOG stock has pulled the sma's down.

Resistance
The current price is well below the January 4, 2010 YTD closing high and the 12-31-09 YE close, both now important recent, and far away, resistance and benchmark prices. GOOG is just below the June 9 trough of 474.02. Until GOOG regains and closes above some benchmark prices, higher resistance seems moot.

Support
GOOG is just above the 2010 YTD low on May 21 of 472.05. This is really the only support that truly matters currently. Support, and the bar, for GOOG has been lower and lower. GOOG is also just above the August 2009 peaking on 471.37, which is the next lower critical support.

Moving Averages
GOOG is below all the simple moving averages on the chart: 25d, 50d, 100d, and 200d. The 25d sma has broken down through 50d, 100d, and 200d sma's. The 50d is below the 100d and crossed below the 200d - the Death Cross or Black Cross on May 25. The 100d crossed below the 200d, yet another, and longer term, Death Cross, on June 4. The 25d, 50d, and 100d sma's are descending and the 200d sma is leveling off.

Uptrend Line
The uptrend line, a rate of price ascent, is from the November 24, 2008 closing low of 257.44 up through the May 21, 2010 closing low of 472.05, the 2010 YTD closing low. GOOG has broken down through a previous uptrend lines, so this is a new, redrawn uptrend line. GOOG has now broken down through this uptrend line on June 23.

Downtrend Line
The downtrend line, a rate of price descent, is from approximately the November 6, 2007 all-time closing high of 741.79 down through the January 4, 2010 high of 626.75, the peak YTD closing high so far. GOOG continues well below this downtrend line.

Relative Strength Index (RSI)
RSI 14 day = 41.77 is marginally oversold and is well above the amazing low of 13.72 on May 5
RSI 28 day = 40.57 is marginally oversold and is above 2010 lows in the mid-20s
The RSIs are now marginally oversold, with plenty of upside. How much upside does GOOG have?

MACD (12,26,9)
The MACD flipped to bearish on June 25, after being bullish since May 28.

Long-Term Trend
The 10 month exponential moving average of 506.97 is a long-term indicator and shown on the monthly chart below. That is the line in the sand, so to speak, for the long term signal of a bull or bear market. GOOG continues below this indicator. GOOG is struggling with the long term bear signal.

Conclusion
GOOG continues in an intermediate term bear market and a long term bear market. GOOG has struggled below $500, the Bear Abyss. GOOG is now testing the 2010 YTD low. The RSI 14 and 28 day are marginally oversold. The MACD signal has switched to bearish. The moving averages are bearish, including two very bearish Death Crosses.

Google news and fundamentals are reviewed in the previous post here. Google, Motorola, Verizon, and Adobe unveiled the Motorola Droid X on June 23 to counter  the Apple iPhone 4 launch on June 24. But at this point this had no positive effect on GOOG. Hopefully at this point buyers will step in and GOOG has tested the bottom and ultimate support has been found.


GOOG Monthly Chart

Below is the monthly GOOG chart since January 2005 for a long-term perspective. The overall analysis and commentary are the same as for the daily chart above. The yellow horizontal line, the current price, plus the yellow downtrend and uptrend lines are the same, and as described, on the daily chart above. The white moving average line is the 10 month exponential moving average, which is the long-term bull or bear market signal, as discussed above with the daily chart.



Disclosure
We have no position in GOOG


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Droid vs. iPhone: Google News & Fundamentals (Weekly Update)

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Smartphone Talk: Discussing Droid

(CNBC) Discussing the smartphone showdown between Google and Apple, with John Stratton, Verizon CMO; Eric Schmidt, Google CEO; Sanjay Jha, Motorola CEO; Shantanu Narayen, Adobe CEO; and CNBC's Dennis Kneale. Watch video on the unveiling of the Motorola Droid X on CNBC.


Droid Takes on the iPhone 4

Overview
Google, Motorola, Verizon, and Adobe joined forces on June 23 to unveil to Motorola Droid X, to counter the iPhone 4 launch on June 24. Reviews of Droid, and comparison to the iPhone 4, have been very favorable. Google CEO Eric Schmidt stated the next battle is for the mobile platform, that is, Apple iOS versus Google Android. The battlefield is devices, market penetration, carriers, OS, and apps. A technical review of the GOOG stock chart will be posted later this weekend.

In a previous post this week, some obstacles facing Google were noted as 1) the withdrawal from China, the world's largest internet market, 2) smartphone competition, notably the Apple iPhone 4, and 3) the ad revenue trend going mobile while Google is still mostly desktop oriented.

Android Smartphones & Android OS
Google has expended much effort in this area, which is the future of consumer technology. A continuous stream of media reports analyze smartphone market share by manufacturer, retailer, OS, web usage, etc. and the favorite subject is Google versus Apple. Adobe Flash Player 10.1 launched June 22 for all Android platforms. The Android OS is still a small share of the mobile platform market but increasing rapidly. However, monetization, significant cashing in, of this effort by Google has not been realized. The next GOOG quarterly earnings report should show the profit impact, if any, as a result of the Google Android.

Android Apps
Developers generally view Android as having long-term potential and therefore are expending effort to develop apps for the Apps Marketplace.

China
Reportedly, Google must submit to an annual inspection by June 30 so this issue may be resolved one way or the other very soon. Previous reports had stated that Google's internet license in China expired March 31 and Google has not attempted to renew it. In addition, Google is reportedly building a trade case against China over internet censorship, in cooperation with the USA and Europe. The argument is that internet censorship acts as a trade barrier. However, China has now responded on June 21, "China's internet administration is not a system of trade policies". Google's search is apparently working in mainland China, from Hong Kong. However, Google is now at a competitive disadvantage in China to Baidu, the search engine market leader. Baidu is increasing their market share rapidly and has left Google in the dust.

Google Search Engine
Nielsen reported this week the Google May 2010 USA search engine market share was 65.1%, no change from April. March was 65.7%, February 65.2%, and January was 66.3%. Analysts have been noting GOOG's market share is flat. Hitwise reported that Google received 72.1% of search engine hits in May. Is the top in? Microsoft Bing has made some headway into Google's turf.

Mobile Advertising & Acquisitions
Now Google has a mobile advertising platform to go squarely against Apple iAd with the completion of the AdMob acquisition. Smartphones are the future and mobile advertising is the cash flow future! The AdMob acquisition approval by the FTC was seen as an "unexpected positive". Google has also announced the acquisition of Invite Media, which is a demand-side platform, which helps buyers navigate high-volume display advertising exchanges.

Apple iAd
Apparently the Apple iAd developers agreement excludes Google. However, Apple is beginning to loosen up their exclusionary tactics as the FTC begins to scrutinize their trade practices. This would be to Google's advantage. We'll see how this works out as the iAd goes live in July. Apple announced April 8 a new mobile advertising platform along with the iPhone OS 4, now iOS 4. Obviously, the iAd platform is a direct threat to Google's advertising revenues, since Apple has made it clear it is going in the mobile advertising business. AAPL stock, news, and fundamentals are reviewed by Apple Digest here.

Quarterly Earnings & Analysts' Estimates
Google beat Q1 estimates but not expectations. Analysts' estimates are mixed. Piper Jaffray maintained an overweight rating last week, and a target of $700, based on strong Q2 click data. Citigroup gave a buy rating to GOOG the week of May 24 with a $640 price target, stating all the concerns about Google are "overblown". Then Citigroup lowered the target to $630 on June 14, noting a change in forex expectations and reduced Nexus One smartphone sales expectations. Also on June 14, Caris & Co. reduced the price target from $565 to $560 and maintained Average rating, noting Q2 clicks are not meeting Street expectations for USA and Europe plus Microsoft Bing has started to gain search market share from Google in Europe.

Google Chrome OS
Devices using the Chrome operating system (not be be confused with the Chrome internet browser) are expected by at least November, hopefully before the holiday shopping season. Chrome OS takes a new approach compared to the traditional Microsoft Windows PC-based operating system. Chrome OS is a web browser as operating system, designed to operate in the cloud, on the internet. There will be virtually no footprint, and therefore files, on the desktop. All of the OS plus spreadsheet, word processing, email, etc. will be online, not on the desktop. Is this the future of consumer computing? That is, little or no software on the desktop PC or laptop? Whether we are all going to the cloud is still unknown, but I personally think we are. This is all nice, but how will Google monetize this OS and produce a significant revenue stream? Dell is reportedly preparing to install Chrome OS on some products.

WiFi Privacy Issue
As Google travels the Earth recording information for Google Earth and Maps, WiFi data was also recorded. Several nations, and USA states, are investigating this as a possible citizen privacy breach. This certainly makes good politics. However, these were unsecured WiFi networks which anyone can access. The ultimate repercussions for Google are unknown.

Google Cloud
Google has completed the application process to go into the "Government Cloud" market. This could be a potential significant source of revenue in the future. Now that Microsoft Office 2010 has been launched, and is also available online in the cloud, Google is attempting to compete directly with Google Docs. This cloud competition should be interesting, but Microsoft has a huge lead. Google also announced collaboration with VMware to develop and deploy business enterprise apps in the cloud via Google App Engine, a platform for building and hosting web applications in the cloud. There is also Apps Premier, the Enterprise Divison's flagship product for businesses.

Developers I/O Conference
This conference was the week of May 17 and Google had plenty of announcements! Some of the highlights were 1) activating 100,000 Android devices per day, 2) unveiled the Android 2.2 Froyo OS for smartphones, 3) Froyo will support Adobe Flash, 4) will purchase Simplify Media, 5) through Simplify Media will launch streaming music service, 6) will start selling music through Android Market, 7) announced collaboration with Sony, Intel, and Logitech to start "Google TV", 8) YouTube will have a channel on Google TV. Google is busy! In addition, there was a tremendous amount of Apple Bashing at the conference. It is now crystal clear it is Google versus Apple in more and more markets. The Big Question is, how will all this be monetized and when will significant revenue streams come online and hit the GOOG bottom line?

Branding
The Google brand is supreme online in America and also the most visited website.

Long-Term Outlook
Google beat Q1 estimates, but not analyst and investor lofty expectations. Of course, it's the long-term outlook that is dampened by the Chinese issue and the world's largest internet market plus the Apple iAd. The question is how much investors will discount Google's PE. Google's PE TTM has stayed in the lower 20s for weeks. In comparison, Baidu's TTM PE is now an astronomical 101 and has been in the upper 90s for quite some time. It's all about expectations and the market has reduced its expectations of GOOG and increased those of BIDU, for example. Again, the Big Question is, how will all these Google ventures and products be monetized and when will significant revenue streams come online and hit the GOOG bottom line?

Product Revenue Streams
There's Android smartphones, Android smartphone OS, Google Apps Marketplace, Chrome browser, Chrome OS, Google Apps cloud computing, Google Docs to compete with Microsoft Office 2010 online, and even Google TV! What is making a net profit besides the online ad revenues??? The core business, online advertising, still accounts for 96% of GOOG business. I think this question is weighing on GOOG stock and investor confidence and expectations. Google's President of Global Sales Operations Nikesh Arora said in May, 2010: "If we are a one trick pony, we have a pretty good trick". So far this trick has worked unimaginably well, but for how long?

Google Music
Yep, an online store to compete with Apple iTunes may be coming this autumn.

Google TV
An explanation of Google TV, by Google, was posted here. This is a promising idea, TV advertising, if Google can bring this to fruition, that is monetize it. The time frame on TV advertising revenues to possibly become material revenue stream appears to be long-term. Stay tuned...

CNBC: American Titans
CNBC has done a feature on Google Inc., "Searching for More", the week of May 10 in their American Titans series. Click here for the commentary and analysis in this feature.

Annual Shareholders Meeting
The Google Inc. stockholders meeting was Thursday, May 13. CEO Eric Schmidt spoke and the gist of his message was: "All is well after a year of great tumult". CEO Schmidt also commented on the China Censorship issue: the situation "seems to be stable", with Google redirecting search requests from mainland China through Hong Kong. He mostly talked up the Google Android smartphone OS, currently at 28% of USA consumer sales (compared to Apple 21%). 65,000 Android OS phones are being shipped every day worldwide on 34 devices in 49 countries.

The Curious Case of CEO Eric Schmidt
Schmidt was not on the Q1 Earnings conference call on Thursday, April 15. It was announced he would not be henceforth, period. With the recent accusations of Google being hacked from China, the China censorship issue, Apple CEO Steve Jobs introducing the direct competition of the iAd, and therefore the intense media's, analysts', and investors' scrutiny of Google, this was a PR disaster. At most, and worst, this is indicative of a problem between CEO Eric Schmidt and Google. Regardless, this absence of Schmidt spooked the market at a critical time when Schmidt should have been speaking to media, investors and analysts.


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Tuesday, June 22, 2010

Google Has Obstacles Ahead (Video & Stock Chart)

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Google Inc.


Google Recovery At Risk

What will keep Google from returning to its all-time stock highs? NASDAQ analyst Steve Chalmers outlines the risks facing Google. GOOG daily stock chart is below video.

Three major risks are:

China Google pulled out of China and the world's largest internet market.

Smart Phone Competition Google has spent a lot of time and money on the Android smart phone, but now is facing "fierce competition" from Apple and the iPhone 4.

Ad Revenue Going Mobile Ad revenues are shifting from the desktop to mobile. Google is not as well positioned and not in as dominating position in mobile as in desktop.





Google Well Below 2010 Highs


Google closed today at 486.25, down -22.42% or -$140.50 from the 2010 YTD high of 626.75 on January 4. GOOG closed last week, Friday, June 18, at 500.03, regaining the 500 level. GOOG closed at 488.56 yesterday, Monday, June 21, to fall back below 500. The 480s have had a lot of price interaction since May 20 and even earlier at the Flash Crash on May 6.

GOOG broke down through the 25 day simple moving average yesterday, Monday, June 21. GOOG has been below the 50d, 100d, and 200d sma's for weeks.



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Sunday, June 20, 2010

Google Climbs Back to $500! (Chart)

GOOG


China Annual Internet Inspection of Google Due June 30?


Overview
Google once again reached the benchmark $500 price at the close this week, which seems to be an equilibrium without any significant GOOG news. Google is up +2.36% for the week, up +2.97% for the month, down a dismal -19.35% for the year, and up +71.90% since the March 9, 2009 market bottom. This equates to +$11.53 for the week, +$14.40 for the month, a painful -$119.95 for the year, and +$209.14 since the March 9, 2009 market bottom.  GOOG is down -200.22% or -$126.72 from the 2010 YTD high, of 626.75 on January 4.  By comparison, the overall market, the S&P 500, is up +2.37% for the week, up +2.58% for the month, up +0.22% for the year, up +65.18% since the March 9, 2009 market bottom, and down -8.20% from the 2010 YTD high on April 23.  So, GOOG has been under-performing the market this year yet still has outperformed the market since the March 9, 2009 market bottom.

A second Death Cross occurred on June 4, the 100 day simple moving average crossed below the 200 day simple moving average.  Previously, the 50 day simple moving average crossed below the 200 day simple moving average - the Death Cross or Black Cross, on May 25.  GOOG YTD closing low was on Friday, May 21 at 472.05, although this low was tested on June 9 with a 474.02 close.  Google's short-term operating performance has been very good. Of course, it's the long-term outlook, with investors concerned about the possible (probable?) loss of the Chinese market and what will be the second significant revenue stream for Google.

Google News and Fundamentals
A review and update of Google news and fundamental analysis is in the previous post. A review and weekly update of USA and World market and economic news and fundamental analysis is hereOverall, the USA and global economic data remains cautiously optimistic and fears about Europe have eased some.

Google Daily Chart
Below is the GOOG daily chart for 2010.  A monthly chart is included at the bottom of this page for a broader perspective.

Noteworthy Closing Prices on Daily Chart below:
Current $500.03 (Yellow horizontal line)
2010 YTD 1-4-10 High $626.75
2010 YTD 5-21-10 Low $472.05
YE 12-31-09 $619.98
10 Month EMA $511.94


GOOG Climbs Back to $500!


Intermediate-Term Trend
The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, flipped to an intermediate-term bear market on Tuesday, May 4. That is, the 25d sma is now less than the 50d sma. The market pullback, Flash Crash, and general malaise of GOOG stock has pulled the sma's down.

Resistance
The current price is well below the January 4, 2010 YTD closing high and the 12-31-09 YE close, both now important recent, and far away, resistance and benchmark prices. GOOG is just below the June 3 closing peak of 505.60 and is noteworthy recent resistance. Until GOOG regains and closes above, higher resistance seems moot.

Support, Has GOOG Found Support?
GOOG is just above the September 22, 28, and 29, 2009 closing highs and peaks of 499.06, 498.53, and 498.53, respectively.  Google has had difficulty regaining and holding $500. Solid support has been critical for GOOG during all the Beat Downs: China, Apple iAd, Q1 Earnings, Eric Schmidt, plus the general market pullback. However, the support, and bar, for GOOG has been lower and lower.  It has been encouraging that GOOG has been able to remain above the May 21 2010 YTD trough, closing low of 472.05.  GOOG is also back to the higher end of the July and August 2008 consolidation trading range.

Moving Averages
GOOG regained the 25d sma on June 15, but still remains below the 50d, 100d, and 200d simple moving averages.  The 25d sma has broken down through 50d, 100d, and 200d sma's.  The 50d is below the 100d and crossed below the 200d - the Death Cross or Black Cross on May 25.  The 100d crossed below the 200d, yet another, and longer term, Death Cross, on June 4.  The 25d, 50d, and 100d sma's are descending and the 200d sma is leveling off.

Uptrend Line
The uptrend line, a rate of price ascent, is from the November 24, 2008 closing low of 257.44 up through the May 21, 2010 closing low of 472.05, the 2010 YTD closing low.  GOOG had broken down through a previous uptrend lines, so this is a new, redrawn uptrend line.  GOOG has managed to stay above since June 10, which is encouraging.

Downtrend Line
The downtrend line, a rate of price descent, is from approximately the November 6, 2007 all-time closing high of 741.79 down through the January 4, 2010 high of 626.75, the peak YTD closing high so far. GOOG continues well below this downtrend line.

Relative Strength Index (RSI)
RSI 14 day = 57.41 is reasonable and is well above the amazing low of 13.72 on May 5
RSI 28 day = 44.16 is marginally oversold and is above 2010 lows in the mid-20s
The RSIs are reasonable, with plenty of upside. How much upside does GOOG have?

MACD (12,26,9)
The MACD flipped to bullish on Friday, May 28, and has remained so, after being bearish since Friday, April 16 with a sell off.

Long-Term Trend
The 10 month exponential moving average of 511.94 is a long-term indicator and shown on the monthly chart below. That is the line in the sand, so to speak, for the long term signal of a bull or bear market. GOOG continues below this indicator.  GOOG is struggling with the long term bear signal.

Conclusion
GOOG continues in an intermediate term bear market and a long term bear market. GOOG has struggled below $500, the Bear Abyss.  GOOG is now right at 500.00, at 500.03. Are the Beat Downs over for GOOGGOOG stock is surviving and recent prices have been encouraging and hopefully suggest the bottom is in for GOOG..  The RSI 14 and 28 day are reasonable. The MACD signal has switched to bullish. The moving averages are bearish, including two very bearish Death Crosses.

Google news and fundamentals are reviewed in the previous post here. Hopefully at this point buyers are continuing to step in and GOOG has found the bottom and ultimate support, the equilibrium.  Google is venturing into so many areas, yet significant revenue streams have not been developed from these efforts.  Until Google proves viable in an area other than online advertising, the stock may stay in limbo.  Overall, concerns about GOOG are 1) market share has flat-lined, 2) regulatory scrutiny has increased, 3) operating margins have peaked, 4) new revenue initiatives will be immaterial.


GOOG Monthly Chart


Below is the monthly GOOG chart since January 2005 for a long-term perspective.  The overall analysis and commentary are the same as for the daily chart above.  The yellow horizontal line, the current price, plus the yellow downtrend and uptrend lines are the same, and as described, on the daily chart above. The white moving average line is the 10 month exponential moving average, which is the long-term bull or bear market signal, as discussed above with the daily chart.



Disclosure
We have no position in GOOG.










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