by Serge Berger | June 25, 2014 8:16 am
Google I/O, the annual developer conference of technology giant Google (GOOG, GOOGL) is set to kick off today in San Francisco. The gathering always attracts a big crowd as the company announces new products and plans, but this year’s conference comes at a time when GOOGL stock sits at an interesting juncture on the charts, which could set up a juicy trade to the long side for the active investor crowd.
Much like Apple’s (AAPL) annual developer’s conference, Google’s is a big deal. Anyone from investors to engineers and technology geeks will paying close attention to the two-day meeting for new product releases and will try to read between the lines to see what new products and services the company may be developing in the near future.
Among other things, Google is rumored to unveil some sort of set-top TV box and possibly other Internet-connected devices. Competition among big technology players like Apple and Google is fierce as everyone tries to gain market share anywhere from the living room to the car.
We shall see what new products or services that Google announces today and tomorrow, and more importantly for the active investor crowd, how GOOGL stock reacts to this news.
From a multiyear perspective, GOOGL stock remains trending higher in an orderly fashion, which is to say that rallies are followed by consolidation periods and dips get bought.
On the below multiyear weekly logarithmic chart, note that the 2009 uptrend remains intact and that the stock currently trades near the upper end of a channel dating back to 2011. Earlier this year, GOOGL stock pierced above this channel, but a mean-reversion move quickly came to the rescue before the stock could go too vertical. Over the past couple of months, Google has had time to reset and now looks constructively positioned for a next push higher.
On the daily chart, the constructive resetting of the stock is more visible. Note that the lows/double-bottom in late April/early May coincided with GOOGL’s rising 200-day simple moving average (red line). Google stock then made another higher low in June, all of which is pressing the stock against the lateral resistance line (black) around the $578-$580 area.
In other words, GOOGL stock now stands a good chance of finally breaking past this band of resistance and move back towards the March highs, i.e. the $610-$620 area.
Given the aforementioned developers conference today and tomorrow, we have a good news catalyst that could push the stock past resistance.
Active investors could use a break past the $580 mark to buy the stock for a move into that $610-$620 area.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
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