Spotting repeated patterns usually helps traders and analysts to take their decision. In this connection interesting pattern in Google shares has occurred last two years. It provides investors with profitable opportunities as important entry and exit levels are determined easily.
Last two years the tech giant continued its double digit earnings growth. The revenues were stable without any seasonal deviations however the stock price trend does not coincided with earnings smooth trend. As seen on the chart the peak at beginning of 2010 has been followed by 6 month decline halted by bottom in July and second one in August. The August price floor confirmed trend reversal pattern which led to bullish trend for GOOG. It lasted until the beginning of 2011 then the pattern repeated. Next bottom was again in the summer months exact in the same period as previous year. The first appeared end of Jun and second end of September. Apparently summer months are the entry point for Google stock and the winter months (early January) prove to be exit ones.
So far the cycle seems to repeat itself. The peak we have already seen in the start of 2012 was followed by downtrend. Shares dropped from $670 to the bottom of $564 (200 day moving average support) to trade at $605 now. If this seasonal pattern continues as previous two years we should be in the middle of the downtrend with indicative bottom at parallel channel support line, the $520-540 area.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.