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Google Sputters, but a Turnaround Could Come Soon

David Becker
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Google Sputters, but a Turnaround Could Come Soon

Momentum stocks have tumbled during the past two weeks and high flyer Google (NASDAQ:GOOG) has lost more than $100 dollars since the beginning of March. Finding support levels could be tantamount to determining where the Nasdaq will hold, but the recent breaches of major support levels is definitely concerning.

Google sliced through the 200-day moving average on Thursday and is poised to test the January lows near 1082. The next level of target support is this area is breached is the gap which started in October after Google released better than expected earnings.

Momentum on the stock is very negative. The MACD is at its lowest level in more than 18-months. The trajectory of the MACD is pointing to lower prices. One bright spot for bulls is the current level of the relative strength index (RSI). The RSI is printing at 29, which is below the oversold trigger level and could represent an area where traders look to purchase the bellwether technology stock. The last time Google reached oversold levels on the RSI in August of 2013, it represented a bottom and the stock went on to rally 47%.

In economic data released Friday, Personal consumption rose by 0.3% in February according to the Commerce Department. Spending on physical goods rose 0.1% and spending on services grew 0.3%.

Economists surveyed had been expected spending to rise 0.3% in February. January’s consumer spending figure was revised down to a 0.2% gain from a previously estimated 0.4% rise. Personal income also rose by 0.3% in February. Economists had predicted a 0.2% gain after January’s 0.3% rise.

Inflation remains tame. The price index for personal consumption expenditures, the Federal Reserve’s preferred gauge of inflation, was up 0.1% in February and up 0.9% year over year.

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