Monday, September 27, 2010

Google Regains 200 Day Average (Charts) GOOG


Google Celebrates a 12th Birthday on September 27, 2010

Google Overview

GOOG Google closed above the 200 day simple moving average on Friday, September 24, at $527.29, although the 200d sma descended to meet GOOG. Nonetheless, Google is up a credible +7.68% for the week and up a healthy +17.28% for the month, but down -14.87% for the year. GOOG is still up a market-beating +81.44% since the March 9, 2009 market bottom. This equates to a gain of +$37.64 for the week, an impressive +$77.77 for the month, a painful -$92.19 for the year, and an amazing +$236.90 since the March 9, 2009 market bottom. GOOG is down a dismal -15.79% or (ouch!) -$98.96 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 +23.08 and +2.05% for the week at 1148.67 on Friday, September 24, 2010. The S&P 500, SPX, is up +9.47% for the month, up +3.01% for the year, and up +69.79% since the March 9, 2009 market bottom. SPX is down -5.64% from the April 23, 2010 YTD closing high of 1217.28. The SPX is now above the trading range that began on May 18. So, GOOG has been under performing the market YTD in 2010. GOOG has now outperformed 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 Gains for 4th Consecutive Week!) 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, reversing one of these Death Crosses.

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 had been drifting, without direction, due to uncertainty on current and future growth rates. However, GOOG has risen with the September Stock Market Rally. GOOG is currently trading at 22.81 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 $527.79 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 200 Day Moving Average

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 $527.29
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 had 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). GOOG had been in this trading range since breaking down on May 18. GOOG rallied up to the top of the trading range on Monday, September 20, then rose above on Tuesday, September 21, has been above since, and negated 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 to bullish 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. Higher up are the March 11 and April 15 peaks of 581.14 and 595.30, respectively. The current price has rallied above very key resistance, the close on July 15 (494.02) just before Q2 financial results were reported. GOOG is now valued higher than the "disappointing" Q2 results. 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 still far away, resistance and benchmark prices.

Support Because GOOG is above the YTD lows, there are multiple levels of support below. The descending 200 day simple moving average (523.89) was resistance but is now recent support. The top of the recent trading range, 508.10 on August 5, is benchmark support. Further below, the regained descending 100 day simple moving average 483.19 and the ascending 50d sma (482.29) are support.

Moving Averages GOOG has now regained all the moving averages on the daily chart above: the 25, 50, 100, and 200 day simple moving averages. The 25d sma is now ascending and should regain the 50d and 100d sma's soon. 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 showing the price damage GOOG has suffered this year that this September Rally is slowly mending.

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 since.

Downtrend Line 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 = 86.73 is overbought and well above the recent low of 17.01 on August 24 and the unbelievable low of 4.79 on July 6. A 2010 YTD high of 90.15 was reached on September 21. The RSI 28 day = 62.30 is ascending towards 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 have been pushed upwards by this September Rally yet there is some remaining upside.

MACD (12,26,9) The MACD = a very high +6.01 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 3.4M shares on Friday, September 24.  The 20 day moving average is approximately 2.65M. Volume spiked as GOOG reached and surpassed the top of the trading range. However, volume did drop below the 20d ma afterwards.

Long-Term Trend The 10 month exponential moving average of 496.74 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 rallied above this indicator this past week. 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. Google is still an extraordinary cash flow machine! GOOG continues in an intermediate term neutral market and a long term neutral  to (now) bullish market. GOOG has struggled below $500, the Bear Abyss, until this past week. GOOG has rallied comparably with the market, actually better. The moving averages reveal the price weakness and include three Death Crosses. GOOG has surprisingly rallied above the recent trading range, may have a sustained upside breakout, and is finally getting some respect!

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 496.74, which is the long-term bull or bear market signal. GOOG rallied above 10m ema this week with a close on Friday, September 24 of 527.79. GOOG has stayed mostly below the 10m ema since May 2010 indicating a long-term bear market.

About Google
Google market capitalization is now 12th largest in USA at $168.05B, behind #1 Exxon $314.42B and #2 Apple $267.05B. 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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