Sunday, May 02, 2010

Why We Need To Watch Google (GOOG)

Above is a  daily chart of GOOG and in the lower panel is the NASDAQ (QQQQ).  If you compare both markets you'll notice that  GOOG and the Q's  moved perfectly together  for this entire rally until now.  Over the past few weeks we are seeing a major divergence take place between these two markets. The Q's went on to make a new swing high in April but GOOG is actually making a much lower high setting up what is known as a bearish divergence.

Google is the 4th most heavily weighted stock in the NASDAQ carrying a 4.7% weighting. Google is now testing a very significant support area which comes in around 520. A break of this support area could put pressure on the NASDAQ causing the index to move lower.

My personal opinion on GOOG is that this stock is going to fall out of bed. This stock couldn't get out of its own way in the face of a rising stock market so what do you think is going to happen if the NASDAQ begins to move lower?   I have 3 words for you ":LOOK OUT BELOW!" 

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