Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Google's Train Is Taking Off, Don't Miss It!

|Includes: Alphabet Inc. (GOOG)

In the last month, Google (NASDAQ:GOOG) experienced 2 major plunges in a row. First, the stock price moved from $670 to $625 and then it moved down to $578. This new plunge created opportunities for some, but many people do not know when to initiate a position with Google. Earlier I was able to tell bottoming of Tiffany's (NYSE:TIF) and now I am calling on bottoming of Google based on my regression analysis.

Date

Open

High

Low

Close

Volume

Change %

2/1/2012

584.94

585.5

579.14

580.83

2,278,453

0.12%

1/31/2012

583

584

575.15

580.11

2,142,716

0.42%

1/30/2012

578.05

580

573.4

577.69

2,330,967

-0.39%

1/27/2012

570.78

580.32

569.33

579.98

3,618,815

2.09%

1/26/2012

571.98

574.48

564.55

568.1

3,228,004

-0.24%

1/25/2012

577.51

578.71

566.38

569.49

4,988,196

-1.97%

1/24/2012

586.32

587.68

578

580.93

3,056,391

-0.78%

1/23/2012

586

588.66

583.16

585.52

3,413,040

-0.08%

1/20/2012

590.53

591

581.7

585.99

10,576,774

-8.38%

1/19/2012

640.99

640.99

631.46

639.57

6,305,274

1.05%

1/18/2012

626.63

634

622.12

632.91

2,763,190

0.69%

1/17/2012

631.98

631.98

625.68

628.58

1,909,394

0.57%

1/13/2012

626.26

626.95

621.06

624.99

2,307,338

-0.74%

1/12/2012

631.22

632.89

626.5

629.64

1,875,854

0.59%

1/11/2012

623.66

629.39

621.12

625.96

2,400,582

0.45%

1/10/2012

629.75

633.8

616.91

623.14

4,395,615

0.11%

1/9/2012

646.5

647

621.23

622.46

5,825,720

-4.24%

1/6/2012

659.15

660

649.79

650.02

2,694,024

-1.36%

1/5/2012

661.75

663.97

656.23

659.01

3,283,277

-1.39%

1/4/2012

665.03

670.25

660.62

668.28

2,864,365

0.43%

1/3/2012

652.38

668.15

652.37

665.41

3,677,850

3.02%

When we look at Google's technicals, since the start of the year, the biggest predictor of Google's stock price is its volume. In fact there is a strong and inverse correlation between Google's daily volume and daily change of its stock price. The correlation between the two variables is -.072 which means the as the volume gets higher, the stock price goes lower. When we square this correlation, we get an R2 value of 0.52 which tells us that 52% of the variance in Google's recent stock price can be explained by using volume alone.

Let's analyze the data further. Google's average daily volume is 3.21 million. My regression analysis shows me that each additional 623,000 volume brings the stock price down by 1%. Now that I established the strong relationship between Google's recent volume and its stock price change, I will look at Google's volume trends since the new years to examine where it is headed.

As you can see, Google's volume is back to normal levels, which means investors panic about Google is over. This reminds me of Oracle (NYSE:ORCL) in December. If Google continues to follow Oracle's pattern, it should be up soon.

Investors waiting to initiate a long position with Google should initiate it now and those who are currently shorting the stock should start covering within the next couple days. Historically, every plunge of Google was followed by a strong rally. I believe that Google will go up again in no time.