In my last musing about internet giant Google Inc. (GOOG) on May 21 here (http://investorplace.com/2013/05/goog-is-full-right-now-come-back-later/) I went over the near-term overbought conditions of the stock and said it would likely have to either consolidate in price or time (sideways movement) for some time before standing better odds of moving higher again. The stock has since pulled back and along with the broader market last week flashed a bullish reversal, which is something I am taking note of.
As a quick reminder from the multi-year chart below, the stock still looks favorable for further upside, yet the slope of the rally off the November 2012 lows remains somewhat steep. Through this lens I sense that the stock will at some point have to correct back toward the $800 area, but likely not just yet.
From January 2010 until August 2012 the stock continually found resistance in an area ranging roughly from $630 – $670, making the resulting breakout important from this longer-term perspective and thus not likely the stock will break below $670 anytime soon.
On the longer-term chart also note that the stock has over the past few weeks pulled back from the upper end of the up-trending channel, which somewhat subsided the immediate-term overbought conditions.
On March 21st, when I last wrote about Google Inc. (GOOG), the stock was trading some 17% above its 200 day simple moving average. After the stock’s recent pulled back it now only trades around 14% above this moving average, and at last week’s lows traded 10.50% above it. Given that this stock trades in fairly close correlation to the broader market it wasn’t surprising to see the stock finding a tradeable bottom last Thursday June 6th. At the time the stock had retraced exactly 38.20%, an important Fibonacci support area, which was also fairly close to the stock’s 50 day simple moving average. After leaving a bullish hammer candle on Thursday, traders with a close eye on the tape noted the opportunity for a long-side try. Now, two trading days later the stock is at minor resistance, but from a swing trading perspective looks to at least have room up to the mid May highs and beyond there to $940.