Saturday, December 4, 2010

Google Pulls Back -2.88% (Charts) *Under $600 for 14 days* GOOG


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Google Overview

GOOG Google continued below $600 this past week to close at $573.00 on Friday, December 3, 2010. Google was down -2.88% for the week, is up +3.11% for December, and now down -7.58% for the year. GOOG is up a market-beating +96.98% since the March 9, 2009 market bottom. This equates to a loss of -$17.00 for the week, up +$17.29 for December, down -$46.98 for the year, and up an incredible +$282.11 since the March 9, 2009 market bottom. GOOG is down -8.58% and -$53.77 from the 2010 YTD closing high of $626.77 on November 8. After struggling in the Bear Abyss below $500, GOOG has been above $500 for 54 consecutive trading days (since September 20), was above $600 for 21 consecutive trading days (from October 15 to November 12), and now has been below $600 for 14 consecutive trading days (since November 15). GOOG has been below the 20-day simple moving average, a commonly watched sma, for 15 consecutive trading days. GOOG finished November down -9.45%, after gains in October +16.72% and September +16.84%.

S&P 500 By comparison, the overall market, the S&P 500, was up +2.97 for the week, is up +3.74% for December, is up +9.83% for the year, and is up +81.03% since the March 9, 2009 market bottom. SPX is just 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 has lagged the market in November and December. A review of the S&P 500 is here.

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 Pulls Back -2.88%

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 is 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: $573.00
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 continues descending but the 50d sma is ascending.

Resistance GOOG has pulled back from the 2010 YTD closing high of 626.77 on November 8. Current resistance is the 583.00 area (middle yellow horizontal line on the daily chart above). The closings were 583.72, 583.55, intraday 582.75, 583.01, and 582.11 on November 16, 17, 22, 23, and 29, respectively. The 583.00 price also is support from January 2010 and December 2009. Next resistance is the benchmark price of 600.00 (highest yellow horizontal line on the daily chart above). Buyer conviction did not keep GOOG above 600.00 as support and it is now resistance. The descending 20-day simple moving average of 593.82 could prove to be resistance.

Support Recent support is the dip to 555.00 this past week on November 30 (close 555.71) (lowest yellow horizontal line on the daily chart above). This has proven to be the bottom thus far and was the dip related to the news that the EU has launched an anti-trust investigation of Google.

Moving Averages GOOG has been below the descending 20 and 25 day simple moving averages for 15 consecutive trading days. 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 50d is ascending, regained the 100d sma on September 27, and regained the 200d sma on October 28. The 100d is ascending and regained the 200d sma on November 24. 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 = 36.90 continues oversold and is now ascending. 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 = 36.69 is oversold and may be leveling off. 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 dropped significantly on the recent pullback.

MACD (12,26,9) The MACD = -4.92 continues very low, is ascending, and has been negative for 23 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.

Volume GOOG traded 2.6M on Friday, December 3, which is below the 20 day moving average of 2.8M, which is descending. The high has been an incredible 14.8M shares on October 15, 2010 (day after Q3 earnings release), a YTD and multi-year high. At the recent bottom of 555.71 on November 30, the volume was a very high 7.1M, which is encouraging and shows buyer support. By comparison, the 50 day sma is approximately 3.25M and 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 533.46 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, November, and into December. 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 has dipped. 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 +123% and +$316 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 533.46, which is the long-term bull or bear market signal. GOOG rallied above 10m ema in September 2010 and the current close of 573.00 continues above, indicating a long term bull market.

We are long GOOG.

About Google

Google market capitalization is now 5th largest in the USA at $183.23B, behind #1 Exxon $358.98B and #2 Apple $291.19B. Google is the 3rd largest technology company in the 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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