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Tuesday, April 7, 2009

Short Week for the Market but A Long Week in School... Google Looking Good

I have not been blogging lately because I have all of my school finals this week. I will try to blog as much as I can, but can't promise anything. This week being a short trading week I may not have posted too much anyway. Today was an ugly day for the bulls, but the good news is volume was lighter. Today I added to my long term portfolio and bought some shares of Google. With GOOG reporting next week it may have been my last chance to get them below 400 a share. I think Google will beat numbers, because the numbers have been revised so low, that it should be an easy beat for GOOG. On the other hand I didn't buy as many shares of Google as I could, because if they miss we could see Google back around 300 a share, and I saved some money to buy more if that happens.

I have a website I run for my family business Golden Age Cheese Co. and I paid Google more this year than any year previous year for click costs (as well as Yahoo and MSN for that matter). Sales were down, clicks were slightly higher (this is because during recessions people find alternate ways of entertainment such as: playing video games, watching TV, and surfing the web... If more people search the web using Google this will reflect in Google's quarter- another reason I think they'll beat), but the price per click was higher; this is because the Internet space is still growing, and the bid per click is increasing. Many analysts leave the increasing cost per click out of the picture. The sponsored keyword market (these are the sponsored results Google puts on the right hand side- an easy and guaranteed way for any business to get to the first page of search results if they bid enough $ per click) is a giant auction where businesses compete by offering a higher bid for each keyword. In 2001 I was top bidder on the keyword cheese for 10 cents a click... I bet I couldn't touch that keyword now for under $1 a click. This is one way Google will be able to continue to grow their profits in the years to come. I am very bullish on Goog! The low end estimate is $4.61 per share and the high end estimate is $5.36 per share with the consensus being at $4.98 per share. Google's last quarter earnings were $5.10 per share. The chart below shows that Google has resistance at around 380 per share, and with a good earnings report and help from the market that should be an easy short term price for Google. If we can break Google above 380 we can see next resistance at around 410 and then around 450 per share. However on the downside if Google breaks below 335 per share which could easily happen with a bad report, we could see Google back down to around 290 per share (click on the chart to get a larger more clear picture).

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