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Talk about 2 dimes short and a day late. It seems almost nostalgic to ask the
question whether it is time to buy Google's stock (GOOG) yet. If you are not
already in this big winner, what century have you been sleeping in, right?
Anyway, for those of us sitting on the sidelines marvelling at the action,
this one is for us...
The post-earnings euphoria is finally waning, the $500 and $600 price targets
are starting to look fuzzy, and GOOG now finds itself swaying more and more
at the mercy of general market tones and emotions (do not forget that GOOG
was finally allowed to enter the exclusive S&P 500 club). I look at the
chart now, and I am sure I am seeing the same things almost everyone else
sees. In five meandering trading days, the stock has pulled back about 20
points on declining volume, and the stock is finally at oversold levels. It
looks poised for a bounce if it were not for the multiple support levels that
call out below: like the middle Bollinger Band at $450 which just so happens
to neatly coincide with the post-earnings low. Trader Mike provided an
excellent technical review of Google's stock last week, and I think his
cautious observations still apply. I will just say that if GOOG is not a buy
here, then it sure is close to a buying point.
What I will add to the analysis is a look back at Google's post and
pre-earnings behavior since it began life in 2004. This analysis came out of
an email exchange I was having with a friend. He said that GOOG tends to
bottom out about three weeks post-earnings. Being the data kind of guy that I
am, I busted out the price stream, loaded up a few queries, and voila. Here
is a table that shows when and how GOOG has posted minimum and maximum
closing price levels between earnings dates. As always, I encourage you to
draw your own conclusions, but what I see is indeed some kind of regularity
to the minimums and maximums between earnings. GOOG tends to bottom out four
to six weeks after earnings, and it tends to find a maximum as earnings
approach (and the giddy excitement and anticipation builds). Happy hunting,
but be careful out there!
