Stock prices fluctuate based on buyers/seller perception rather than stock performance right? So unless people's perception on the Google stock changes drastically, we can expect to see similar patterns in the future as we have witnessed in the past. Let's look at some patterns to see how true this could be. (Everything I post from here on out will assume cash trade going long.)
Looking back 3 yrs, I've noticed compared to other stocks, Google seems to be quite consistant.
- Sideways moves within the $25-30 zone typically last no more than 2 months.
WHAT THIS MEANS:
This means that unless the spread of the uptrend/downtrend exceeds $25-30 or it lasts longer than 2 months, it's still a sizeways move. Price is very likely to bounce back within that range. As soon as the price exceeds that amount, we can expect a trend to follow. This is true even of the most recent drop in share price from $750-$425. Immediately after it dropped by $30/share in the beginning of January, it continued to fall....hard. Once the trend starts, I cannot predict how long the trend will last with any certainty that applies in all cases.
WHY THIS IS IMPORTANT:
If you purchased at the top of a sideways move on the 3rd month and see your stock price fall more than $30, it not likely to come back up at least until the downtrend bottoms out.
- $80-$100 drop is typical in the beginning of the yr. Return in stock price takes at least 4.5 months.
It's happened 3 yrs in a row. After the '06 drop, it took almost a yr to come back up to the high of that yr. In '07, 6 months. In 2008?...I project it will take even longer. The drop this yr was huge.
MY PREDICTION:
It's been 2.5 months since the annual January drop. I predict it will take at least that much longer to come back up. Even if stock are bottoming out now and Google begins an uptrend tomorrow, I don't expect to see prices nearing $700 until at least April.
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