Friday, October 1, 2010

Google Continues Above 200 Day Moving Average (Charts) *Also continues above $500* GOOG


Is it looking up for Google and CEO Eric Schmidt?

Google Overview

GOOG Google was flat for the week, along with the S&P 500 and closed at $525.62 on Friday, October 1, 2010. GOOG has now stayed above the descending 200 day simple moving average for 6 consecutive trading days. Google was down -0.41% for the week, up an amazing +16.8% in September, but is still down -15.22% for the year. GOOG is still up a market-beating +81.69% since the March 9, 2009 market bottom. This equates to a loss of -$2.17 for the week, an impressive +$75.77 for September, a painful -$94.36 for the year, but an amazing +$234.73 since the March 9, 2009 market bottom. GOOG is down a dismal -16.14% or (ouch!) -$101.13 from the 2010 YTD high of $626.75 on January 4.

S&P 500 By comparison, the overall market, the S&P 500 closed down -2.43 and -0.21% for the week at 1146.24 on Friday, October 1, 2010. The S&P 500, SPX, was up +8.76% in September, is up +2.79% for the year, and is up +69.43% since the March 9, 2009 market bottom. SPX is down -5.84% from the April 23, 2010 YTD closing high of 1217.28. The SPX is now above the trading range that began on May 18 and has entered into a narrower, higher trading range. 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 in Narrow Trading Range) is here.

Death Crosses and Reversal 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 has now regained the 100d sma, negating this earliest Death Cross.

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, actually been a leader of, the September Stock Market Rally. GOOG is currently trading at 23.11 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 $525.62 appears low, yet continues to reflect some 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 Continues Above 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 Close: $525.62
2010 YTD High, January 4: $626.75
2010 YTD Low, July 6: $436.07
YE December 31, 2009: $619.98

Intermediate-Term Trend The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, generated a buy signal on Thursday, September 30. That is, the 25d sma is greater than the 50d sma. However, the relationship between these two moving averages is a lagging indicator and finally caught up with GOOG's amazing September Bull Run.

Resistance Because GOOG is below the YTD and all-time high, there are multiples levels of resistance above. Current resistance is the recent closing peak, on September 27, of 530.41 (the highest yellow horizontal line on the daily chart above). GOOG has entered additional resistance, the sideways trading of late April and early May 2010. In addition, GOOG is just at the bottom range of heavy consolidation trading occurring from late January through late February 2010. This could be significant resistance. Further gains by Google will be hard won. 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 (522.27) was resistance but is now recent support. The top of the recent trading range, the closing price of 508.10 on August 5, is benchmark support (the lowest yellow horizontal line on  the daily chart above). These are critical support for GOOG to stay above 500.

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 steeply and has regained the 50d and 100d sma's. The 50d bottomed on September 8, is now ascending, has regained the 100d sma, but is still below the 200d sma. The 100d has leveled off and is below the 200d. The 200d continues to descend 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 = 84.57 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 94.12 was reached on September 27. The RSI 28 day = 71.52 is overbought and well above the 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 have decreased somewhat with the recent consolidation trading.

MACD (12,26,9) The MACD = a very high +3.14, flipped to bullish on September 7, and has downtrended with the recent consolidation trading. Previously the MACD had been bearish since August 13.

Volume GOOG traded 2.2M shares on Friday, October 1, 2010.  The 20 day moving average is approximately 2.85M. Volume spiked as GOOG reached and surpassed the top of the trading range. However, volume did drop below the 20d ma afterwards and the 20d sma has leveled off.

Long-Term Trend The 10 month exponential moving average of 501.77 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 recently. 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 is now in an intermediate term bull market and a long term neutral  to (now) bullish market. GOOG has struggled below $500, the Bear Abyss, until September 2. GOOG has now been above $500 for 10 consecutive trading days. GOOG has rallied with the market and actually outperformed the market during the September Rally. The moving averages reveal the price weakness and include two Death Crosses. GOOG has surprisingly rallied above the recent trading range but faces difficult resistance above. Google is now valued higher than the close on July 15 (494.02), just before the "disappointing" Q2 financial results were reported.

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 501.77, which is the long-term bull or bear market signal. GOOG rallied above 10m ema on September 24 and the current close of.525.62 is also above. 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 $167.52B, behind #1 Exxon $318.44B and #2 Apple $258.10B. 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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