Timing is everything not only in life but in the market as well. When we look at a chart there is not only a price axis but there is a time axis which most people seem to ignore. I think time is more important than price but that's a topic for a future post.
Above we have a weekly chart of GOOG. Google has only been around 2 1/2 years so with such limited data it's hard to find any repetitive patterns especially on weekly charts. However, I have noticed a cycle in Google that appears to be very accurate.
If you look at all the major buy points in GOOG since this stock began trading, you will notice that they all took place EXACTLY six months apart. Those vertical green lines you see on the chart are all six months apart. Notice how GOOG puts in a bottom at these points in time followed by a rather nice rally.
The next 6 month cyclical low for this stock is due towards the end of this month. Here is what I am looking for. I'd like to see GOOG move lower below 450 maybe even testing the trend line in the next 1 to 3 weeks. That should take the stochastic oscillator below the buy line where previous buy points have developed. After that I'd like to see GOOG make a 3 or 4 week high which is where I will buy this stock. My rules are very clear and straight forward. If GOOG does not do what I just mentioned, I will not initiate a trade. If GOOG rallies from now into the end of the month, I will do nothing. I need this stock to sell off for me to be a buyer. Anyway, that's my plan and I'm sharing it with you ahead of time so that if you want to watch this trade develop, you can.
ModernGraham Valuation Of Adobe Systems Inc.
13 minutes ago