Technology and search engine giant Google Inc. (GOOG), while year to date outperforming the broader U.S. stock market has diverged from the broader indices since the beginning of March. On March 5th I discussed here ( http://investorplace.com/2013/03/google-is-building-another-head-of-steam/ ) that the stock was ready to move higher still into the $850 area. Since then we got within $5 of said target and started a consolidation phase.
For a little perspective, let’s take a step back and look at the nine months or so on the chart below.
After breaking a major line of resistance in August 2012, the stock shot up sharply only to re-test the same line again November. The stock then hit a tradable low, and on the daily charts formed a major bullish hammer candle on November 16th, the same day that the S&P 500 bottomed. From there Google Inc. (GOOG) more or less pumped steadily higher in a nice up-trending channel. Even when the stock briefly corrected in mid January it quickly bounced back into the channel. From the November lows up to the most highs on March 6th the stock rallied just about 32.00%.
When I scribed my vibes on Google Inc. (GOOG) in early March, the stock had started a new breakout after a consolidation phase, thus leading me to see the stock higher. At current juncture the stock looks much less bullish and in fact looks on the heavier side. You calling me fat? No, I am not seeing a major demise of the stock, in fact longer term there are no significant headwinds from a chart analysis perspective that I see. In the intermediate term however the recent trickling down off the highs is now pinning the stock right at its up-trend dating back to November 2012. Thus those looking to buy the stock will most likely find better opportunities lower. How much lower? The 50 day simple moving average around the $780 mark may offer first support. Better support however would be in the $740 – $750 area, which also serves as the mid-way point, or the 50% retracement of the rally off the November lows.