Saturday, September 18, 2010

Google Regains 100 Day Moving Average (Charts) GOOG

GOOG


Marissa Mayer, Google Vice President of Search Products & User Experience was among those launching Google Instant Search on September 8,  2010


Google Overview

GOOG Google closed above the 100 day simple moving average on Friday, September 17, at $490.15, although the 100d sma is descending to meet GOOG. Nonetheless, Google is up +2.94% for the week and up +8.92% for the month, but down -20.94% for the year. GOOG is still up +68.50% since the March 9, 2009 market bottom. This equates to a positive +$14.01 for the week, an impressive +$40.13 for the month, a painful -$129.83 for the year, and an amazing +$199.26 since the March 9, 2009 market bottom. GOOG is down a dismal -21.79% or (ouch!) -$136.60 from the 2010 YTD high of $626.75 on January 4.

S&P 500 By comparison, the overall market, the S&P 500 closed up +16.04 and +1.45% for the week at 1125.59 on Friday, September 17, 2010. The S&P 500, SPX, is up +7.27% for the month, up +0.94% for the year, and up +66.38% since the March 9, 2009 market bottom. SPX is down -7.53% 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 September Rally. A review of the S&P 500 (S&P 500 Rallies Above 200 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. However, the 50d sma is now ascending and should cross above the 100d sma soon.

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 21.21 PE (ttm) with an EPS of 23.11. GOOG has been trading for most  of 2010 with a PE in the low 20s. Even now, the current GOOG price of $490.15 appears low, yet reflects uncertainty over 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 Regains 100 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 $490.15
2010 YTD High, January 4: $626.75
2010 YTD Low, July 6: $436.07
YE December 31, 2009: $619.98

Trading Range GOOG began 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 $490.15 has now ascended above 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 relationship between these two moving averages is a lagging indicator, is mostly neutral and/or negated in a trading range pattern, and have not caught up with the September Rally.

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 the nearest 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. The descending 200 day simple moving average is still high above at 525.65. GOOG continues 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 descending 100 day simple moving average is nearest, and important  support, at  483.65. The ascending 50d sma (479.08) should eventually come into play. 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, of  course.

Moving Averages GOOG has now regained the 25, 50, and 100 day simple moving averages, but remains below the distant 200d sma. The 25d sma is descending but beginning to level off 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 50d sma should cross above the 100d sma soon. The 100d continues descending and is 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 = 74.28 is overbought 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 = 44.85 is leaning oversold, 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 = +3.33 and flipped to bullish on September 7. Previously the MACD had been bearish since August 13. The MACD has been generally uptrending since August 26.

Volume GOOG traded a huge 5.6M shares on Friday, September 17 as the stock rose +$9.09 and +1.89%. This was the highest daily volume since July 16, the day after the Q2 earnings release. The 20 day moving average of approximately 2.5M. Volume has been low and trended downwards since July 16, the day after the Q2 earnings release, as noted.

Long-Term Trend The 10 month exponential moving average of 489.99 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 and now is just at the 10m ema at 490.15.

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


Google Monthly Chart

Below is the monthly GOOG chart since January 2005. The overall analysis and commentary is the same as for the daily chart above. The current price, the yellow horizontal lines, and the yellow uptrend and downtrend lines are the same, and as described, on the daily chart above. The white moving average line is the 10 month exponential moving average 489.99, which is the long-term bull or bear market signal. GOOG is just at the 10m ema with a close on Friday, September 17 of 490.15. GOOG has stayed mostly below the 10m ema since May 2010 indicating a long-term bear market.



About Google
Google market capitalization is 14th largest in USA at $156.21B, behind #1 Exxon $309.48B and #2 Apple $251.57B. 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.


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Disclosure
We have no position in GOOG.


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