Google (GOOG) stock just recently broke to new all time highs, and I think we should do some group technical analysis on the stock chart. As with all technical analysis here on ST101, all concepts used have been explained and posted on prior. The following will be used in our group analysis (if you also have any questions at all just simply leave a comment with the post):
- What is Technical Analysis
- Stock Charts, Understanding the Basics
- Volume Interpretation with Stock Charts
- Resistance and Support Example
- Understanding MACD
- Understanding RSI
- Moving Averages Explained
- Stock Chart Quiz 1, volume
- Stock Chart Quiz 2, general knowledge
Google Stock Chart
Couple points to make with this chart (help posts are listed above if needed):
- The break to all time highs supported by strong accumulation type volume, this is important as the stock broke through the latest two resistant lines as seen.
- Buy points on this chart based on momentum were first the break past $490, 2nd the break past $520, and yesterday's break to another new all time high.
- Relative Strength Index is JUST starting to show strong overbought as it rises above the 70 mark. This we will have to keep an eye on moving forward.
- The MACD is crossing back over to show bullish as the black line (12/26 EMA) crosses over the red line (9 EMA). AS we can see though the MACD is already relatively higher than what it normally trades around.
- Lastly, the stock has received good support from its uptrending moving averages, which in this case are the 10, 20, and 50 MAs. These will continue to be important moving forward.
If we purchased our shares of Google back with the break of $490, then we could raise our stop loss at this point to $500 - $510 which still gives us good room for movement. Another way to play this would be to sell half our position here and hold the rest since the market is showing signs of weakness. A third way to play this now would be to add perhaps 50% to our position around this area of $428, buying on strength and setting a new one month price target of $550.
If we bought a position today of let's say around $528, then we would want to place a stop around $495 to allow maximum growth and minimize our downside to roughly 5%. Or, if you want to play this new position tightly you could place your stop at about $515 which is just below the 2nd most recent break point.
And, if you think Google is set to breakdown and wanted to short, then I'd place a tight stop loss around $540 based off shorting today. A better way to play the short side would be to use limit orders and get yourself a short position once the stock falls under $510 on strong distribution volume.
Remember, regardless if you are bullish or bearish you always want to follow a strategy. I have written 6 tips to becoming a successful online investor, and this is one of them. Be patient and perhaps you will get to ride Google stock all the way to $600 this year.