Media darling stock Google () has staged a decent recovery off its March 2008 lows, but is the stock showing new signs of life?
Before getting ultra-bullish on Google, I’d like to see it close perhaps a couple of days above the key resistance line and also the declining 50 period moving average, both of which converge at $480.
To the eye, it looks like Google has indeed formed a bottom, complete with momentum divergences and consolidation. That may indeed be the case, but it’s still best to wait until the ‘preponderance of evidence’ is in your favor, which would mean waiting just a bit longer to see if the current down-swing forms a higher low. Should this happen, that would add to your confidence that the stock has put in a potential bottom.
The $480 resistance zone is critical for the stock to overcome. It may be a high-flyer, but stocks do tend to follow some basic technical analysis (charting/visual) parameters – at least use them for confirmation and risk-management.
A clean break above $500 would be even better for the bulls and probably for the overall market! Bulls, keep your fingers crossed!