Google Long Term Charts Look Fantastic

I was browsing through some long term charts tonight and I was surprised at how good the weekly and monthly charts for Google, Inc. (Nasdaq:GOOG) look. I never trade $GOOG because quite frankly I think its boring, takes up too much capital and doesn’t really move very much on a percentage basis. However, I am a huge fan and user of $GOOG products. Android is huge, I’ve been a gmail user since its inception and love the whole Google Docs idea as well.

After I reviewed the charts for $GOOG, I looked through recent tweets on Stocktwits for community thoughts on $GOOG and maybe to find some good articles or posts on the stock. I was pleased to see that Howard Lindzon has been getting excited about $GOOG as well. He mentioned it on Monday’s Momentum Monday show and also on a recent post about Stocks in 2012. Because I am excited more so in the long term charts rather than the near term daily charts (which don’t look shabby either), I find it comforting that Howard is thinking about this stock from a “story” perspective which would lend itself to a longer term play.

Looking more closely at the charts, $GOOG is really not too far from its all time highs after spending several years consolidating. $GOOG is definitely not the exciting startup it once was, and it takes much more to move the stock than it used to. That being said, overall the consolidation of the past couple of years has been very orderly when looked at from this perspective. $630-$640 has been a clear level of contention, and would be the key area to focus on.

 

Drilling down towards the weekly chart, it is clear how the $630’s have sparked some sharp reversals. However, $GOOG has been setting progressively higher lows and returned to the top of the base very quickly after being rebuffed in November. Once again, the consolidation has been very orderly when looked at from this longer term perspective.

The daily chart is where $GOOG starts to get a little messy, although the overall pattern remains quite constructive. There are a lot of gaps and without the context of the longer term charts, it would appear that $GOOG was not making any progress. My initial guess would be that $GOOG still needs a little more time before it could seriously assault its long term resistance, and I would actually prefer a pullback as I would rather buy longer term positions after short term weakness.  The $560 level is an area of potential support should it weaken considerably, but the $590-$600 area may also be an area to watch. The 50-day moving average would be in this area and it also coincides with an unfilled gap left a couple of weeks ago. Buying breakouts in this market has not been very reliable, but it would be hard to ignore any sustained strength above $630. This may signal a multi year breakout that could lead to much higher prices.

I have no position in $GOOG but will certainly be monitoring it more closely in the coming weeks.

Good Trading,

 

Joey

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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