Saturday, September 11, 2010

Google Rallies Above 50 Day Moving Average (Charts) GOOG


Google CEO Eric Schmidt introduced Google TV at the Google I/O Conference in May 2010. He reiterated on September 7 that Google TV will be available later in 2010. Apple TV and Google TV will compete with each other by the Holidays.

Google Overview

GOOG Google closed above the 50 day simple moving average on Thursday, September 9, although admittedly the 50d sma dipped to meet GOOG, lol. Nonetheless, Google is up +1.24% for the week and up +5.80% for the month, but down -23.20% for the year. GOOG is still up +63.68% since the March 9, 2009 market bottom. This equates to a positive +$5.84 for the week, an impressive +$26.12 for the month, a painful -$143.84 for the year, and an amazing +$185.25 since the March 9, 2009 market bottom. GOOG is down a dismal -24.03% or (ouch!) -$150.61 from the 2010 YTD high of $626.75 on January 4.

S&P 500 By comparison, the overall market, the S&P 500, SPX, is up +0.46% for the week, up +5.74% for the month, down -0.50% for the year, and up +64.01% since the March 9, 2009 market bottom. In addition, SPX is down -8.85% from the April 23, 2010 YTD closing high of 1217.28. So, GOOG has been under performing the market YTD in 2010. GOOG has been comparable to the the market since the March 9, 2009 market bottom and during this current rally. A review of the S&P 500 (S&P 500 Regains 100 Day Moving Average) is here.

Death Crosses A third 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. Earlier, the 50d sma had crossed below the 100d sma on March 4. GOOG YTD closing low was on July 6 at 436.07.

Google News and Fundamentals Google reported Q2 earnings in July and the financial results were very good, but below expectations. GOOG's problem is growth, that is, Google is becoming so large that the heady growth rates of the past cannot be maintained. Hence, the stock is drifting, without direction, due to uncertainty on current and future growth rates. "General malaise" comes to mind with GOOG. GOOG is currently trading at 20.60 PE (ttm) with an EPS of  23.11. GOOG has been trading with a PE in the low 20s, which makes the current GOOG price of $476.14 probably a little low, yet reflects uncertainty over future the future growth rate.

Economic and Market News Information about the USA and world economies is posted at Boom Doom Economy and Matrix Markets.

Google Rallies Above 50 Day Moving Average

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

Noteworthy Closing Prices on Daily Chart Below
Current $476.14
2010 YTD 1-4-10 High $626.75
2010 YTD 7-6-10 Low $436.07
YE 12-31-09 $619.98
10 Month EMA $487.44

Trading Range GOOG begin a trading range after the 2010 YTD closing low on July 6 of $436.07. The highest closing price subsequently has been 508.10 on August 5 (the highest yellow horizontal line on the daily chart below). The lowest closing price since has been 436.07 on July 6 (the lowest yellow horizontal line on the daily chart below). However, GOOG has been in this trading range since breaking down on May 18. Based on these parameters, the GOOG at $476.14 has now ascended to the midway point in the trading range. Support was shown at 451.39, 450.98, and 450.02 on August 23, 26, and 31 GOOG, and the market, rallied above. This support area could be argued as the "new bottom" of the trading range.

Intermediate-Term Trend The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, generated a sell signal on September 9. That is, the 50d sma is greater than the 25d sma. Previously, a buy signal had been in effect since August 6. However, the lack of a trend is rendering the intermediate-term signal more neutral than clearly buy or sell.

Resistance Because GOOG is below the YTD and all-time high, there are multiples levels of resistance above. The close on July 15 just before Q2 financial results were reported is benchmark resistance at 494.02. The recent closing highs of 505.35 and 508.10 on August 9 and 5 are resistance and milestone prices. These prices are the first of many levels of resistance above that GOOG needs to regain and close above. GOOG is well below the January 4, 2010 YTD closing high and the 12-31-09 YE close of 626.75 and 619.98, respectively, both now important, and far away, resistance and benchmark prices.

Support Because GOOG is above the YTD lows, there are multiple levels of support below. The recently regained 50 day simple moving  average (475.17) is nearest, and important, support. The recent closing lows of 451.39, 450.98, and 450.02 on August 23, 26, and 31 are key support as the recent bottom. Ultimate support is the 2010 YTD closing low of 436.07 on July 6. That's the goal line stand for GOOG.

Moving Averages GOOG has now regained the 50 day simple moving average yet is below the 25d, 100d, and 200d sma's. The 25d sma is descending sharply and below the 50d, 100d and 200d sma's. The 50d bottomed on September 8 and is now ascending, but still below the 100d and 200d sma's. The 100d is descending sharply and below the 200d. The 200d is descending and barely on the chart in the  upper right hand corner.

Uptrend Line The yellow uptrend line, a rate of price ascent, is from the November 24, 2008 closing low of 257.44 up through the July 6, 2010 YTD closing low of 436.07. GOOG broke down through this trendline on August 30 and 31, but bounced above on September 1 and has remained above.

Downtrend Line (not on chart) The yellow 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) The RSI 14 day = 59.26 is increasing and well above the recent low of 17.01 on August 24 and the unbelievable low of 4.79 on July 6. The RSI 28 day = 45.59 is leaning oversold and leveled off, but is above 38.28 and 38.94 on August 31 and 24 and also above 2010 lows in the mid-20s. The RSIs are above the YTD lows with plenty of upside.

MACD (12,26,9) The MACD is flipped to bullish on September 7. Previously the MACD had been bearish since August 13. The MACD has been uptrending since August 26.

Volume GOOG traded 2.0M shares on Friday, September 10 and is below the the 20 day moving average of approximately 2.36M. Volume has been low and trended downwards since July 16, the day after the Q2 earnings release.

Long-Term Trend The 10 month exponential moving average of 487.44 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 has been mostly below this long term bear signal since May.

Conclusion The Q2 financial results, reported in July, disappointed but were more mixed than totally disappointing. GOOG continues in an intermediate term bear to neutral market and a long term bear market. GOOG has struggled below $500, the Bear Abyss. GOOG rallied with the market recently. The moving averages reveal the price weakness and include three Death Crosses. GOOG appears to be in a trading range for the foreseeable future.

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. GOOG appears to be in a trading range, indicated by the higher and lower yellow horizontal lines. 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.

About Google
Google market capitalization is 14th largest in USA at $151.75B, behind #1 Exxon $311.62B and #2 Apple $240.64. Google is the 4th largest technology company in USA by market capitalization behind Apple, Microsoft, and IBM. Google reported Q2 financial results of $6.82B in Revenues and $1.84B in GAAP Net Income. GOOG last 12 months sales were $23.65B.

We have no position in GOOG.

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