Double Journey

Google Closed yesterday at $486.44.  This represents a 4% drop from the previous close.  This despite the fact that the rest of the market saw a strong day with an up 1% day on the Nasdaq and a 1.5% up day on the Dow.

I’ve actually been looking for an in to Google stock since it originally broke and stayed above the $500 barrier in Jun of 2007.  It broke it a few times before that but could not sustain itself.  in August of 2007, it took a brief dip below $500 but recovered soon thereafter.

Now it has gone under $500, and I believe that will be a strong resistance point from now on.  If it can rally in the next few days and find a way above it, then perhaps it will stay there, but in all likelihood it will stay below.  It is never good when a stock like this, which has been a leader for so long, goes in a tailspin down.  Part of it up until now could be blamed on the overall market.  But when the market turns, and a stock like this doesn’t turn with it, you have to be concerned.

I don’t think it has much to go down from here, but I still don’t think its a buy.  Long term, I believe Google is probably a good buy,especially at a 30P/E.  Short term, $450 is possible, and perhaps lower.