The GOOG chart

Discussion in 'Stocks' started by michaelscott, May 14, 2007.

  1. Just thought I might share this chart I drew. Its obvious to me what might happen next. The price will meet the bottom line and then it will either bounce and go through the top OR the price will go through the bottom. The price target being the height of the triangle at the widest point.

    Some other observations is that the price action the last 6 months is not quite as fierce as last year. This year's triangle isnt as large as last years. The volume has also pulled back substantially. I realize that the price has also risen since the start of 2006, but there were quite a few 20+ million volume days at the start of 2006. This year, there have been few days where we can break 10 million. Today was 3.9 million.

    Based upon what I see here, I dont believe Google 600 will be in the immediate future. Probably the high 500s as the most bullish scenario.

    There is always a possibility that this triangle is a reversal pattern, a 25% chance. I wouldnt come to a conclusion until the price reaches right around 450.

    Since Goog is about 6% of the Qs I believe, this is an important stock to gauge the general market. A drop in Google below the bottomline will be a signal of market weakness. A breakout above the top line will be a signal of market strength.

    If we can assume that Google is a market signal, then this chart demonstrates there will be weakness for a few more weeks to a month. Then after the period of weakness, we will either bounce to new highs or go through the floor.

    The only problem to this thesis is that Google is not quite the actively traded stock it once was. 3-4 million on average traded versus 3-4 times that amount a year earlier.

    The MACD signal up top demonstrates that volatility is over the horizon. Notice how the Google MACD started out with wild surges at the start of 2006. By October, the MACD was becoming compressed into a tight range then there was a breakout.

    Contraction in a price or market indicator usually leads to expansion. I suspect expansion in the future.
  2. Looks like a repeat of last time before the huge Oct. 2006 earnings breakout but on a smaller scale. I suspect next earnings will push google above 520 and thus completing the formation
  3. This chart is going to tell us where the market will go next. The chart is telling us that it will either break out or tank. I dunno where the trend line I drew goes through, but I do know that if it goes through the bottom there is lots of downside. Through the top and we have a different story.

    You cant look at the previous triangle and think this time is different. Sometimes these triangles turn into reversals which are extremely nasty.
  4. Google has only had a single major breakdown and that was Jan 2005 but many breakouts

    The odds favor google breaking out huge again
  5. No, stop, timeout. Wrong way to think.

    These stocks and this market has a mind of its own. You have seen a 6 dollar stock go to 3 or a 60 dollar stock go to 30. In the same way, we can wake up one day to see Google back at 300.

    In fact, some people in the year 2000 watched as their 100+ dollar stocks were shredded into the single digits within 2 years.

    The market will trade it in their own way and determine the price. Yeah, Google is a growth story and the biggest search engine that everyone uses. Doesnt everyone use Microsoft programs too? So why did MSFT go from 60+ to 30 to the course of 7 years?

    All we can do is determine the trend and the applicable pivot points.