Google Stock Shows Opportunity

Posted by Blain Reinkensmeyer
September 20, 2006 at 10:05 pm

***Written By: Blain Reinkensmeyer Stock Forum ID: StockTrading101***

Yahoo (YHOO) posts a quarterly sales warning and the stock tanks 12%+, and Google (GOOG) being in the search engine business also stumbles along side it (though not nearly as bad). The problem with this though is that Google didn’t issue a sales warning, and in fact they are set to meet the streets expectations. So if Google is in line with where they need to be, and Yahoo is to blame for the last two days sell offs, I say Google just went on sale until the weekend.

Yahoo’s fall yesterday was from $29 to a close of $25.75, and Google bounced off its 200 Moving Average support to close above $400 (-$10.88 on the day). Today Google sold the spread between yesterday’s close and the 200 day MA, and closed just a few points shy of the support line at $397 even. This is a perfect spot to buy some shares because you can use the 200 MA as support, and you also have $290 support just around the corner. Within two weeks I bet that Google shares will be back above $400 where they are truly supposed to be.

Google and Yahoo make a great pair trade, and if you believe that Google is going to uphold its numbers, then this is a great time to get in. Yahoo’s misfortune may not be directly related to the economy and the thinking that advertisers are cutting back on spending. Look at last quarter, Yahoo missed and Google made its earnings, this tells me that Yahoo only has itself to blame. Now, if the economy does indeed downtrend, you may see a cutback in advertising spending, and if stats do indeed come out to support this, then look to step away from these two giants. But, the bet right now is definately in favor of Google, and it is just a question of how long shares will be on sale.