Wednesday, March 10, 2010

Bookkeeping: Restarting Google (GOOG) as Stock Breaks over Resistance and China Talks Progress

It has been very difficult to find any worthwhile stocks to buy that are not extremely extended and on a 4 week warpath upward, but Google (GOOG) is a name that fits the bill.  The stock has been weak ever since news broke of a potential pullout of China, [Jan 13, 2010: Baidu Soars on Potential Pullout of China by Google] but the stock has just cleared resistance in the past few sessions, and provides an attractive entry.

While the whole China fiasco seemed very overblown to me, the action by the herd is what it is.  Today the stock seems to be responding to a news report out that there will be a 'development' in talks soon.
  • Google's CEO says the Internet search company is in active negotiations with the Chinese government and expects some sort of resolution in its dispute with Beijing soon. Eric Schmidt declined to give details or a timetable for the discussions, but says "something will happen soon."
  • Schmidt was speaking at a media summit in the Emirati capital Abu Dhabi.

Now that does not mean it will be a good conclusion but one thing Wall Street hates more than bad news is uncertainty.

Since this is a much larger stock than we usually buy and hence less prone to fall 8% on a single session when the market pulls back, I will begin with a larger than normal stake of about 3.7%.   Effectively buying stocks like Apple or Google is akin to buying the NASDAQ versus the relatively random nature of smaller cap stocks.  This follows a breakout by Research in Motion (RIMM) yesterday - which is why it is pretty darn near impossible to short this market right now; all the mutual fund favorites are running together now.  Position was created just over $570; no particular target in mind - just trying to create some long exposure and this is actually a way to do it without wicked volatility.

As an aside, Schmidt reinforced the one huge theme (organic growth) I see in the U.S. (and world) at the same conference:
  • Eric Schmidt told an Arab media conference Wednesday he has been "struck by the explosion of mobile computing" and says the devices are "clearly going to win" the battle with traditional computers.
Long Google in fund; no personal position

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012