As far as technical analysis of the stock goes, Google Inc (NASDAQ:GOOGL)‘s ominous days have arrived. The stock is currently down about 0.45% and trading at $561.67, but that could prove to be just a start in a long dip, if Dan Nathan is right.
On CNBC, Dan Nathan showed that since Google Inc (NASDAQ:GOOGL) hasn’t been able to make new highs as of late, the 50 day moving average line and the 200 day moving average line for the stock have intersected. History hasn’t been very kind to the stocks which have managed to achieve this feat. A sell off storm might be in the making for the maker of Android, which has been celebrated by the top paid Android apps this year.
In order to substantiate his claim for the forthcoming dip in Google Inc (NASDAQ:GOOGL)’s stock price, Nathan used the example of the Russell 2000 index, which met its ugly fate fairly recently.
” […] This is just a technical indicator that some technicians use as weighing momentum, it usually means lower prices, but I just want to make one really important point here is that the last example of a death cross we had was the Russell 2000 and I am using the IWM here back in September, also a similar example, topped out earlier in the year made a series of lower highs, showing really poor relative strength to the large cap to the S&P and to many other indices […],” said Nathan.
Nathan saw Google Inc (NASDAQ:GOOGL) hitting the low $500s in the next couple of months, which would be a good time to buy the stock. Moreover, selling a few call options to finance put options could be another way to benefit from this possible dip into the future.
Technical analysis do not have a 100% accuracy and past behaviour doesn’t always repeat itself, but it is still good to be aware of what might happen in the future, and perhaps even take cautionary measures such as buying puts, if you are already holding the stock.
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