Search engine and global technology giant Google (GOOG) has had a good run (roughly 25% higher) in 2013 along with the rest of the stock market.
Unlike the broader stock market. however, Google stock failed to push to a new year-to-date high in September and has in fact traded in a fairly wide consolidation range since the middle part of May. None of this is much negative for the time being, as sideways consolidation phases in uptrending stocks tend to lead to further gains.
Despite the lack of much uptrending action during the past four months, the stock remains trading above and respecting its July 2012 uptrend. During the past few years, while Google stock is up hugely, broadly speaking it continues to trade in a manner that allows for higher highs over time. In other words, each rally leads to a consolidation or minor correction phase, which over time gets bought again.
At no point has GOOG rallied vertically over an extended period of time without pulling back to major trend/support areas. This is emblematic of a healthy stock and one that institutional investors as a result will not steer clear of, all else being equal.
The daily chart of Google stock looking back to May of this year shows the sideways action more clearly. After topping in early May and subsequently marking a marginally higher high in mid-July, GOOG couldn’t sustain the new highs and again pulled back to the June lows near the $847 area. However, after a rally along with the broader market in September, Google stock still remained within the confines of the multimonth consolidation phase. The September rally did again push GOOG above both its 50- and 100-day simple moving averages, where both moving averages at present coincide around the $885 area.
While in the immediate-term just about anything can happen, should GOOG find it within itself to respect this $885 area, it could (after some more consolidating) turn into a good area of support where Google stock can work higher from.
Regardless of whether this near-term support area holds, Google remains positively positioned on the charts in both the medium- and longer-term time frames.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.