Like SP500, Google GOOG at Critical Make or Break

Dec 16, 2009: 11:04 AM CST

In yesterday’s broad market post, I highlighted that the key US Stock Market Indexs were poised at critical ‘make or break’ resistance levels.  It’s no surprise that certain stocks are showing similar “Make or Break” resistance boundaries.

Let’s take a quick look at Google’s Weekly Chart to see how Google is coming into a key inflection point at $600 per share – and a resolution up or down should clue us in to the next likely move which would likely confirm that which was happening or expected in the broader markets.

There’s nothing complex or mysterious about the $600 level.  The $600 per share level reflects a prior price resistance zone from mid-2008, which was the last time shares traded at these levels.

The common logic of prior price highs reflecting future or current price resistance levels has to do with the psychology or thinking of traders who bought (got long) at or near the $600 level in May, June, or July 2008 and held on for the entire ride down… and back up.

As the market returns back to their “break-even” price, they will exit happily to be back to normal instead of down so much in their account.

There are many more factors of course that go into it, but that is the classical interpretation of old highs having significance in the future.

It’s still an inflection zone to watch – if buyers can overcome selling pressure and push price above $600, it would change the calculus between supply and demand.

Bears or short-sellers who are anticipating a downward move here would be forced to buy to cover on any move above $600, creating a positive feedback environment.

Otherwise, bears expect this level to hold, and they have a lengthy negative volume and short-term negative momentum divergence to bolster their bearish case.

It’s probably better to let the stock tip its hand before trying to enter exactly at the inflection point, unless you are comfortable playing with tight stop-losses.

Let’s watch Google very closely here – a break upwards in Google would likely correspond with an upwards break above 1,121 in the S&P 500, though any down move would also be reflected in the S&P 500 as well.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

4 Comments

4 Responses to “Like SP500, Google GOOG at Critical Make or Break”

  1. thetradedetective Says:

    GIS is almost the identical chart. Huge rally on fading volume, now back to September '08 levels. I think all of these stocks prove we are at a critical inflection point for the broader index. I highly doubt we'll see a definitive move until after the new year though.

  2. thetradedetective Says:

    GIS is almost the identical chart. Huge rally on fading volume, now back to September '08 levels. I think all of these stocks prove we are at a critical inflection point for the broader index. I highly doubt we'll see a definitive move until after the new year though.

  3. Technician's Edge: Quick Look at Levels to Watch in XOM GOOG and AAPL | Afraid to Trade.com Blog Says:

    […] examined Google’s critical level at $600 recently in my post: “Like S&P 500, Google is at a Make or Break Resistance Level.”  The analysis remains unchanged as we remain under $600 per […]

  4. Technician’s Edge: Quick Look at Levels to Watch in XOM GOOG and AAPL | Penny Stock Trading System Blog Says:

    […] examined Google’s critical level at $600 recently in my post: “Like S&P 500, Google is at a Make or Break Resistance Level.”  The analysis remains unchanged as we remain under $600 per […]