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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