Friday, November 19, 2010

Google Dips Below $600 (Charts) *Below 20-day moving average for 6 days* GOOG

GOOG


Google Still Flying High Despite Dip Below $600


Google Overview

GOOG Google dipped below $600 this past week to close at $590.83 on Friday, November 19, 2010. Google was down -2.07% for the week, is down -3.73% for November, and now down -4.70% for the year. GOOG is up a market-beating +103.11% since the March 9, 2009 market bottom. This equates to a loss of -$12.46 for the week, down -$22.87 for November, down -$29.15 for the year, and up an incredible +$299.94 since the March 9, 2009 market bottom. GOOG is down -5.73% or -$35.94 from the 2010 YTD high of $626.77 on November 8. After struggling in the Bear Abyss below $500, GOOG has been above $500 for 45 consecutive trading days (since September 20), was above $600 for 21 consecutive trading days (from Octoberr 15 to November 12), and now has been below $600 for 5 consecutive trading days (since November 15). GOOG has been below the 20-day simple moving average, a commonly watched sma, for 6 consecutive trading day.

S&P 500 By comparison, the overall market, the S&P 500, was up +0.52 and +0.04% for the week, is up +1.39% for November, is up +7.59% for the year, and is up +77.34% since the March 9, 2009 market bottom. SPX is below the November 5 YTD and multi-year closing high of 1225.85, the highest close since the September 19, 2008 close of 1255.08. GOOG has been outperforming the market since the March 9, 2009 market bottom, underperforming for 2010, outperformed in September and October, but is lagging the market recently. A review of the S&P 500 (S&P 500 at Resistance (Charts) *Up a meager +0.52 & +0.04% for week* SPX SPY) is here.

Death Cross The 100 day simple moving average has not yet regained the 200d sma, which signalled a Death Cross on June 4. This Death Cross will probably be reversed this next week.

Google News and Fundamentals Google reported excellent Q3 earnings which are reviewed and analyzed on this blog. Current Google financial data, charts, and review is at the Google Financial Performance page, updated for the latest Q3 financial results reported on October 14. A review and analysis of the most recent Q3 earnings call is at the Google Earnings Conference Call page. Our valuation and target price of GOOG stock is posted at the Google Stock Valuation page. Revenues from outside of the United States were 52% of total revenues in the third quarter of 2010.

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


Google Dips Below $600

Google Daily Chart Below is the GOOG daily chart since October 14, when Google reported calendar Q3 earnings after market close and gapped up the next day. This it to illustrate the just the applicable price interactions with the current close, resistance, and support. A monthly chart is included at the bottom of this page for a broader perspective.

Noteworthy Closing Prices on Daily Chart Below
Current Close: $590.83
2010 YTD High, November 8: $626.77
2010 YTD Low, July 6: $436.07
YE December 31, 2009: $619.98

* The 100 and 200 day simple moving averages and the uptrend line are not shown on the daily chart this week The highest yellow line appears somewhat horizontal but is actually the downtrend line discussed below *


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 the 25d sma is now descending. GOOG's strong September Bull Run (+16.8%) that continued into October (+16.7%) has stalled in November (-3.7%).

Resistance GOOG has pulled back from the 2010 YTD closing high of 626.77 on November 8. Current resistance is the 600.00 area, a benchmark and psychological price (middle yellow horizontal line on the daily chart above). Buyer conviction did not keep GOOG above 600.00 as support. Next resistance is 607.98 on October 20 (highest yellow horizontal line on the daily chart above) and 607.83 on October 19. The descending 20-day simple moving average of 611.45 could prove to be resistance. Next resistance is the 618.00 area, especially the October 18 peak and close of 617.71. The closings of 618.60 and 618.58 on October 26 and 28, respectively, are also related to this support.

Support Recent support is the dip to 583.00 this past week (lowest yellow horizontal line on the daily chart above). The closings were 583.72 and 583.55 on November 16 and 17, respectively. The 583.00 price also is support from January 2010 and December 2009. Additional longer term support exists from  late 2009 and early 2010.

Moving Averages GOOG has been below the 20 and 25 day simple moving averages for 6 consecutive trading days. This is the first time GOOG has been below the 20d and 25d sma's since September 8. GOOG continues above the 50, 100, and 200 sma's (only the 20d and 50d sma's are shown on the daily chart above). The 20d and 25d sma's have begun descending. The 50d is ascending, regained the 100d sma on September 27, and regained the 200d sma on October 28. The 100d is ascending, but is below the 200d. The 200d has leveled off and begun slightly ascending.

Uptrend Line (Not shown on the daily chart this week) 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 November 8, 2010 high of 626.77, the peak YTD closing high so far. GOOG has remained below since.

Relative Strength Index (RSI) The RSI 14 day = 33.61 is oversold and descending. The recent low was 17.01 on August 24 and the unbelievable low of 4.79 on July 6. A 2010 YTD high, and multi-year high, of 94.12 was reached on September 27. The RSI 28 day = 63.30 is reasonable and descending. The 2010 and multi-year high was 87.87 on October 18. The 2010 lows have been in the mid-20s. The RSIs had been pulled upwards by the September and October rally and spiked up on the October 15 gap up. The RSIs have now pulled back to reasonable levels with upside room.

MACD (12,26,9) The MACD = -7.29 continues very low, is ascending, and has been negative for 14 consecutive trading days. The 2010 and multi-year high was +7.27 on October 19. The 2010 and multi-year low was -8.30 on November 17, this past Wednesday!

Volume GOOG traded a mere 2.3M on Friday, November 19, after an incredible 14.8M shares on October 15, 2010 (day after Q3 earnings release), a YTD and multi-year high. The 20 day moving average has leveled off and is approximately 2.6M. By comparison, the 50 day sma is approximately 3.3M and also has leveled off. Buyer conviction and enthusiasm after the earnings report waned and as GOOG approached the 2010 YTD closing high of 626.75 and 626.75.

Long-Term Trend The 10 month exponential moving average of 531.06 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 in September and has stayed above in October and November. GOOG had been mostly below this long term bear signal from April to August.

Conclusion On October 14, Google reported excellent Q3 earnings which are reviewed on the Google Financial Performance page  A review and analysis of the most recent Q3 earnings call is at the Google Earnings Conference Call page. Google is still an extraordinary cash flow machine! GOOG had rallied with the market and actually outperformed the market during September and October - even before the excellent Q3 earnings announcement. Google has set the bar high for the future and EPS growth. The intermediate-term trend is bullish and the long-term trend is bullish. The line in the sand is $600, which GOOG dipped below this week. Will buyer confidence rally GOOG above $600? We think so. More about Google the value of GOOG stock on the Google Stock Valuation page.


Google Monthly Chart
Up +130% and +$333 from November 28, 2008 cyclical closing low of $257.44!

Below is the monthly GOOG chart since the November 2008 cyclical low. 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 of 531.06, which is the long-term bull or bear market signal. GOOG rallied above 10m ema in September 2010 and the current close of.603.29 continues above, indicating a long term bull market.


Disclosure
We are long GOOG.


About Google

Google market capitalization is now 5th largest in the USA at $188.93B, behind #1 Exxon $355.70B and #2 Apple $281.37B. Google is the 3rd largest technology company in USA by market capitalization behind Apple and Microsoft. Just in the past couple of months, Google was 13th largest overall company and 4th largest technology company by market capitalization, until the spectacular rally on excellent Q3 earnings. Current Google financial data is at the Google Financial Performance page. A review and analysis of the most recent Q3 earnings call is at the Google Earnings Conference Call page. More about Google the value of GOOG stock on the Google Stock Valuation page. Headcount: On a worldwide basis, Google employed 23,331 full-time employees as of September 30, 2010, up from 21,805 full-time employees as of June 30, 2010.

Google describes itself in press releases as, "Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program provides businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with offices throughout the Americas, Europe and Asia."

Google's Mission Statement: "Google's mission is to organize the world's information and make it universally accessible and useful. The first step toward fulfilling that mission came when our founders, Larry Page and Sergey Brin, working out of a Stanford University dorm room, developed a new approach to online search that quickly spread to information seekers around the globe. Google is now widely recognized as the world's largest search engine -- a free service whose utility and ease of use have made it one of the world's best-known brands almost entirely through word of mouth from satisfied users."


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