Chart of the Day – $GOOG Breaks 50 Day MA

GOOG has convincingly broken its 50 day moving average for the first time in 2013.  GOOG was THE leader in large cap tech to start this year, so its breakdown is notable from a broader perspective as well.  Now that it’s down about 8% from its highs last month, what’s the technical outlook going forward?

The lifetime chart of GOOG shows the importance of the 750-775 area:

Lifetime daily chart of GOOG, Courtesy of Bloomberg

Lifetime daily chart of GOOG, Courtesy of Bloomberg

I’ve drawn the red line at the 2007 high around 750, and the stock sold off from a similar area in late 2012 after a weak earnings report.  I would expect that level to act as support in the near-term, but GOOG reports earnings on April 18th, and that could be the catalyst for a big move in either direction, technicals notwithstanding.

Zooming in to the 3 year chart, more important long-term support lies at $650:

 

GOOG 3 year daily, Courtesy of Bloomberg

GOOG 3 year daily, Courtesy of Bloomberg

I’m not saying that I expect the stock to sell off down to that level.  Rather, just an observation that if the stock were to get to 650 at some point this year, I would view that as a very favorable risk/reward long entry level.

In the meantime, GOOG is in a bit no-man’s land, with 750 important near-term support, and the all-time high at 844 the upside resistance, with the psychological 800 level maybe a footnote in the technical handbook for now.