Google’s long-term picture: Page not found?

Google fell out of bed yesterday on not as good as expected earnings. While this may come as a surprise to many, already in March I forecasted for my premium members price would reach high-$1200s to low-$1300s. See my tweet with screenshot-proof here. This is exactly what we got the day earnings were announced after hours. Bingo! So what’s next?

Lets look at the big picture first: see weekly chart below. GOOGL has in Elliott wave terms made five waves (black waves 1, 2, 3, 4, 5) up off its 2015 low, and possible five waves up (blue waves III, IV, V; I and II not shown) off is 2009 low which means the advance has most likely ended. Why do I say “most likely”, is because the recent advance during this year could have only been wave-i of 5 as waves are fractal in nature and thus it could be that GOOGL still has some live left. Cont’d below.

Weekly chart.

For that final live-line to happen, price cannot move below the December 2018 low. If it does, then it confirms that Primary-V has indeed ended and that GOOGL has entered a Bear market and will revisit at a minimum $900, possible as low as $500 before rallying long-term again. How exactly this correction will unfold is of course for now unknown. Corrections can be in many forms, which in Elliott wave terms are called; flat, zig-zag, triangle, or any possible hybrid of these.

Zooming in to the daily chart, we can see price has made a what is called “diagonal pattern” in Elliott Wave terms up off the December 2018 low. This can be a leading diagonal (wave-i of 5) or en ending diagonal (all of wave-5). In the former case, we can expect price to bottom around $1050 +/- $50 before rallying to new ATHs (as high as $1600+) before correcting again. In the latter case, as said, price will move well-below the December low.

Daily chart

Thus, for now, GOOGL Bulls are on serious watch and the path of least resistance is down. Of course there will be several twists and turns as corrections do also have rallies, but eventually at least a move to IMHO around $1050 can be expected. Once price gets there we can re-evaluate the charts. One step at the time.

Trade safe!

Arnout, Ph.D.

Founder and President Intelligent Investing, LLC

Vice President NorthPost Partners, LP

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