Is It Time to Buy GOOG Yet?

By Dr. Duru written for One-Twenty

November 2, 2006

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Talk about 2 dimes short and a day late. It seems almost nostalgic to ask the question whether it is time to buy Google's stock (GOOG) yet. If you are not already in this big winner, what century have you been sleeping in, right? Anyway, for those of us sitting on the sidelines marvelling at the action, this one is for us...

The post-earnings euphoria is finally waning, the $500 and $600 price targets are starting to look fuzzy, and GOOG now finds itself swaying more and more at the mercy of general market tones and emotions (do not forget that GOOG was finally allowed to enter the exclusive S&P 500 club). I look at the chart now, and I am sure I am seeing the same things almost everyone else sees. In five meandering trading days, the stock has pulled back about 20 points on declining volume, and the stock is finally at oversold levels. It looks poised for a bounce if it were not for the multiple support levels that call out below: like the middle Bollinger Band at $450 which just so happens to neatly coincide with the post-earnings low. Trader Mike provided an excellent technical review of Google's stock last week, and I think his cautious observations still apply. I will just say that if GOOG is not a buy here, then it sure is close to a buying point.

What I will add to the analysis is a look back at Google's post and pre-earnings behavior since it began life in 2004. This analysis came out of an email exchange I was having with a friend. He said that GOOG tends to bottom out about three weeks post-earnings. Being the data kind of guy that I am, I busted out the price stream, loaded up a few queries, and voila. Here is a table that shows when and how GOOG has posted minimum and maximum closing price levels between earnings dates. As always, I encourage you to draw your own conclusions, but what I see is indeed some kind of regularity to the minimums and maximums between earnings. GOOG tends to bottom out four to six weeks after earnings, and it tends to find a maximum as earnings approach (and the giddy excitement and anticipation builds). Happy hunting, but be careful out there!

 

GOOGLE Minimum Price Between Earnings

 

 

Earnings Date

Next Earnings Date

Min Closing Price ($)

Date for Minimum Price

Days After Earnings

Days Before Next Earnings

24-Oct-04

01-Feb-05

165.10

22-Nov-04

29

71

01-Feb-05

21-Apr-05

174.99

14-Mar-05

41

38

21-Apr-05

21-Jul-05

215.81

22-Apr-05

1

90

21-Jul-05

20-Oct-05

274.01

22-Aug-05

32

59

20-Oct-05

31-Jan-06

339.90

21-Oct-05

1

102

31-Jan-06

20-Apr-06

337.06

13-Mar-06

41

38

20-Apr-06

20-Jul-06

370.02

19-May-06

29

62

20-Jul-06

19-Oct-06

367.23

02-Aug-06

13

78

19-Oct-06

18-Jan-07

459.67

20-Oct-06

1

90

 

 

 

 

 

 

 

 

 

 

 

 

GOOGLE Maximum Closing Price Between Earnings

 

 

Earnings Date

Next Earnings Date

Max Closing Price ($)

Date for Maximum Price

Days After Earnings

Days Before Next Earnings

24-Oct-04

01-Feb-05

203.90

18-Jan-05

86

14

01-Feb-05

21-Apr-05

210.86

03-Feb-05

2

77

21-Apr-05

21-Jul-05

313.94

21-Jul-05

91

0

21-Jul-05

20-Oct-05

318.68

03-Oct-05

74

17

20-Oct-05

31-Jan-06

471.63

11-Jan-06

83

20

31-Jan-06

20-Apr-06

416.38

10-Apr-06

69

10

20-Apr-06

20-Jul-06

440.50

24-Apr-06

4

87

20-Jul-06

19-Oct-06

429.00

09-Oct-06

81

10

19-Oct-06

18-Jan-07

486.60

25-Oct-06

6

85

 

DrDuru, 2006