Google (GOOG Quote - Cramer on GOOG - Stock Picks) posted an all-time high at 747 in November and entered a steep correction. The decline dropped price well below the 200-day moving average before the stock bottomed out near 400 and started a weak recovery. The upside accelerated with a 90-point gap in April, after the search-engine giant posted a strong earnings report.
Unfortunately, it's been nothing but trouble for company shareholders since that time. Despite earnings-driven euphoria, the rally topped out just 11 days later at 602. Gravity then took over, dropping the stock back to multiple support levels near 545 that were broken decisively last week.
The stock is now trading below the opening price of the April gap. This poor positioning means everyone that opened long-side positions after earnings is now losing money. It's a bear dynamic that should keep weight on any recovery attempt, especially with the sell signal triggered by last week's breakdown.
The prognosis for Google going forward isn't a pleasant one. Simply stated, the stock is likely to fill the big gap this summer and trade back into 460.
Alan Farley provides daily stock picks and commentary with his "Daily Swing Trade" newsletter.
Alan Farley
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