Google & Using Monthly Candle Charts for Context

In the past month Google shares (GOOGL) are down -8.22%. Largely due to controversies around their latest AI releases, and investors growing increasingly concerned at the prospect of Google falling behind in AI.

A similar scare occurred shortly after the launch of ChatGPT. Google’s Bard received lukewarm response and the stock dropped to around $85.

Bill Ackman’s Pershing Square Holdings saw that drop as a buying opportunity:

We invested in Alphabet in March 2023 when misplaced concerns over the company’s AI positioning reduced its valuation to 15x earnings.

Pershing Square Holdings 2024 Annual Investor Presentation

Fast forward to January 2024, Google’s stock hit an all-time high of $153.78. Today the stock is trading at $135.41 with a 25x PE ratio.

Are the latest concerns about Google also misplaced?

If you are optimistic that Google will figure out their AI strategy, is the recent pullback a good time to buy?

Looking at a line chart doesn’t offer much insight.

Google 10 Year Monthly Line
Google 10 Year Monthly, Line chart

Here is the same chart as above but using monthly candlesticks.

Google 10 Year Monthly Candles
Google 10 Year Monthly, Candle chart

I find that viewing monthly candlesticks provides much more context and insight around the price ranges Google is trading at. Thus giving an investor clearer price points to execute trades.

To my eye, I see Google’s current price of $135.41 as being in the dead middle of a $124-$152 price range. So will it rally to $152 or drop to $124? Who knows.

My conclusion is to wait until this horizontal price range is resolved.

Carter Worth of Worth Charting had a great quote on this type of “wait and see” approach:

I want to do it after you do it. I don’t want to be the first guy in the door, I want someone else to start to turn it, commit their capital. And if it works the stock will turn and then we want to piggyback.

Carter Worth