Google (GOOG) Breaks Through Key Support

The market is still open as I write this but I wanted to just give a quick update on Google (GOOG). The other day I mentioned that google was much weaker than the market and any downturn in stocks should take google through key support. Well that is precisely what happened. As of right now, google broke down through the all important 520 level. I'll have more to say about google as well as the stock market after the close.  

Potential Support For Google Inc. (GOOG)

Above is a 60 minute chart of Google Inc. (GOOG) and in the lower panel is Google vs the S&P500. As you can see this stock is in a very nice rising channel which means we should be looking to buy at support. Support should form near the lower channel line if google sells off a bit more.

The ratio line in the lower panel is clearly in a strong uptrend which means google is outperforming the S&P over the past 2 weeks.. In fact, this ratio line just made a new high today!

Watch for possible support if this stock trades down to the lower channel line. Today Google Inc. closed 498.72 which was down 1.36% from Thursday's close.

Watch Google Inc. (GOOG) - Inside Day

Monday was a quiet day for Google Inc. (GOOG) as you can see by the inside day that this stock made today. An inside day is simply a day which has a higher low and a lower high than the previous trading day.

The reason I look at inside days is because many time they trigger a breakout causing a trend day which is exactly what short-term trades desire.

The 520 level is an area which I've written about repeatedly and as you can see it's been holding so far. Having said that, I will watch for a breakout of Google's inside day's trading range. I would prefer to see a breakout to the downside because overall I am bearish on the market so I'd rather short stocks right now than buy them.

Today Google Inc. (GOOG) closed at 507.97 up .44 from Friday's close.

Google Inc. (GOOG) - Week In Review

It was a rough week for Google Inc. (GOOG) as well as the rest of the market as heavy selling hit just about every stock and index. For the week GOOG was down 6.19%  from last Friday's close which is in-line with what the NASDAQ and S&P lossed for the week.

Google Inc. (GOOG) did trade as low as 460 on Thursday but managed to bounce back slightly off its lows for the week. The level on the upside that I will we be watching very closely is the 520 area. As you can see in the above chart, 520 was support but now should act as resistance if this stock does rally above 500 again.

For the week, GOOG's volume was heavy at 22.5 million shares traded.  Google Inc. closed at 493.14 down 5.53 from yesterday's close.

Google Inc.(GOOG) - Lagging The Market

Above is a daily chart of Google Inc. and in the lower panel is the S&P500. As you can see the S&P is already making new highs for the month but GOOG has yet to break high. This stock is clearly lagging the market but for those of you who are bullish on this stock, the breakout level is at 509.25. Today Google Inc. closed at 501.27 which was up 3.28 from yesterday's close.

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!" 

Google Inc. (GOOG) - Tight 3 Day Range

Google Inc. (GOOG) will be on my watchlist tomorrow for a short term one or two day trade. As you can see in the above daily chart, GOOG is in a downtrend and is now consolidating. This is the tightest 3 day range we've seen in awhile and should trigger a  large range day once the stock breaks out. This stock also put in an inside day today which  adds to the potential for a large range breakout day.

Being that the stock market and this stock are both in short term downtrends, I'd much rather short a breakout to the downside than buy a breakout to the upside. Today Google Inc. (GOOG) closed at 450.98 which was down 3.64 from Wednesday's close. We'll see what happens tomorrow!

Google Inc - (GOOG) - Inside Day

Google Inc. (GOOG) has been trending lower over the past few months and has now put in an inside day. An inside day is simply a day where the range is contained within the previous day's range.

What I like about inside days is that they sometimes lead to nice trending moves over the next 1 to 3 days. The last inside day that GOOG had was on June 9th and you can see the sell off that took place over the next day or so. On May 3rd we had another inside day but as you can see there was no follow through.

In my experience inside days seem to work about 60% of the time which isn't bad when you consider that most things in the market do not work.  When you combine an inside day with the current trend and trade the breakout in that direction, the odds of success improve to about 65%.

Being that GOOG is in a down trend, I will be watching for this stock to take out the low of the inside day for a possible short entry. 

Today Google Inc. (GOOG) closed at 487.00 which was down 1.22% from Tuesday's close.

Google

Google was up almost 11 dollars today on good earnings. As you know I've been bullish on GOOG based on the 6 month cycle, but I took the trade off yesterday because I didn't feel comfortable holding a position going into earnings. It turns google didn't gap up or down 50 points like I feared, in fact it wasn't even that volatile.

I'd like to get back into this trade if GOOG dips next week. If I do anything I will post it here.

Google, Inc (GOOG) - Tests Breakout Level

Above is a 60 minute chart of Google Inc. (GOOG) with about 10 days of price data. Right now this stock is testing a level which may trigger a breakout. That level is 490 which was the high on two separate days. As I write this  the market is still open and GOOG is trading right there at 490. Let's keep an eye on this stock.

Google Sells Off On Heavy Volume

So far this year the stock market is off to a good start but GOOG on the other hand has gone straight down. Today GOOG gapped down lower but managed to rally just enough to close right on its 50 day moving average. The most recent trendline drawn off of the summer lows has been broken and the volume has increased dramatically to the downside over the past 6 trading days. Even though Google's long term trend is still intact, the most recent price action suggests that the technical picture is beginning to weaken.

Google Inc. (GOOG) - 520 Resistance Being Tested

Just a quick update on Google Inc (GOOG)). Stocks surged on the open carrying GOOG to the 520 level I've been writing about since last week. This is a big level for this stock and so far it's holding. It's early in the day so I'll have more on GOOG after the close.

GOOG: Timing Is Everything

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.

Google Update

One of my readers wanted to know if I am still bullish on google, so rather then just send him an email saying yes I decided to post the above chart to make things easier to understand.

As you know I've been bullish on GOOG based on the 6 month cycle and so far GOOG has been trending higher but very slowly. In fact, GOOG is lagging the market and not even close to making new year highs like the DOW and S&P. When I see a stock that is lagging the overall market I immediately raise my protective stops.

If you look at the above chart you will see that GOOG is still holding its long term trend line. As long as that trend line holds I will remain bullish, however if GOOG breaks last week's low I would exit the trade.

Google Conference Call Summary

Google Conference Call Summary

Expects that International sales will be greater than 50% eventually... Says they are showing fewer ads which are worth more because they have been better targeted; says that they have increased their click through rates... Continues to see momentum in their International business... UK was particularly strong... co says they may see additional pressures on TAC rates going forward... says margins may decline as they continue to invest heavily in the business... majority of CapEx is infrastructure... International revenues: Revenues from outside of the United States totaled $1.71 billion, representing 47% of total revenues in the first quarter of 2007, compared to 42% in the first quarter of 2006 and 44% in the fourth quarter of 2006. Had foreign exchange rates remained constant from the fourth quarter of 2006 through the first quarter of 2007, our revenues in the first quarter of 2007 would have been $23 million lower. Had foreign exchange rates remained constant from the first quarter of 2006 through the first quarter of 2007, our revenues in the first quarter of 2007 would have been $115 million lower... stock trading at $481.31 in after hours. Courtesy of Briefing.com

GOOG Update

That Google trade I wrote about two weeks ago is doing quite well and should be exited tomorrow on the close. If you took the trade you would have about 30 dollars profit from this simple little system.

If you didn't take the trade, don't feel bad because I didn't take it either. I had a bearish outlook on the Nasdaq and I really wasn't looking to buy anything. Oh well.....let's look for the next trade!

Google's 6 Month Cycle

The above chart should not be a surprise to you if you've been reading my blog these past few months.

The 6 month cycle low that took place last March turned out to be accurate because since then GOOG as rallied to an all time high.

The next 6 month cycle low for GOOG is due around September of this year. It's quite possible that a high was put in last week and now GOOG will trend sideways to lower going into the next cyclical low due in September.

As far as i am concerned, I will leave GOOG alone for now and await the next buy signal which is due in about 3 months assuming things line up like they did last March.

NASDAQ AND Google Update

If you recall my last post I spoke about the weakness in the NASDAQ and GOOG. As you can see in the above chart both of these markets have sold off rather sharply even in the face of a 289 point gain in the Dow today.

I scaled out of some of my short position at the close today only because I'm seeing some strength in the financial sector which can be a leading indicator for the overall market.

GOOG Update

I bought GOOG at 473.11 today based on my inside week break out method. There are two places you can place your stop. If you want to keep the risk low, you can place your stop right below today's low. The method really requires to give this trade room which means you have to place the stop below last week's low. I might split the position in two and use both stops. In other words, if GOOG sells off, I might exit half the position if today's low is broken and I'll keep my stop for the remaining half below last weeks low.

I'll exit the trade on Friday next week...not this Friday but the following Friday. Keep in mind GOOG has earnings on Thursday April 19th, so expect volatility and a possible large gap. Depending if I am profitable on the position or not going into earnings will determine if I will hold onto the trade. If GOOG is against me or if I am flat on the position right before earnings, I will most likely exit the trade. I'm not looking for trouble. I need Google to move up tomorrow and Wednesday so I can have a cushion going into earnings. If I don't have much of a cushion I am out!

GOOG Update

One of my readers wanted to know if the cycle is still in play for GOOG so I'm posting the above chart.

I've been bullish on GOOG due to the 6 month cycle that has been dominating Google's price action since this stock began trading. So far the cycle is working perfectly and I am looking for a move over 500 for this stock.

You can place a protective stop below 435 or the trend line, whichever you are more comfortable using.

The entry for this trade was at 455 based on my inside week method.

My original forecast for GOOG can be read here