Everyone will be talking about Google!!

After the markets closed on Friday, Google, GOOG, announced that it will acquire DoubleClick for $3.1B in an all-cash deal! This piece of news makes things lots more interesting because GOOG is reporting earnings on Thursday, 4/19. Let's take a look at some charts to see if we can find some clues as to how GOOG will trade in the coming week.

GOOG's daily chart:
This is a bit difficult to extract information from. The positive thing that I see here is that the daily MAs are moving up, with the 10- above 20- above the 30-day MA. And, GOOG managed to close right above the 10-day MA. It would be interesting to see how GOOG moves with the "DoubleClick" news early next week before the earnings report.

GOOG's weekly chart: GOOG's weekly chart shows that it has been rising and creating higher highs and higher lows for the past 5 weeks; and, the MACD, MFI, and RSI are recovering!

So, overall, GOOG seems to have a bullish bias right now. Let's take a look at GOOG's past earning seasons and see if we can find some more clues!

Since August 2004, there have been 5 instances where GOOG jumped after its earnings. Let's zoom in and take a look at each one.

Case #1: Oct 20041) GOOG sits above all the daily MAs before the earnings with the MAs in bullish formation: 10- above 20- above 30-day MA.

2) MACD is flat with room to go up.

Case #2 Apr 2005:1) GOOG sits above all the daily MAs before the earnings with the MAs in bullish formation: 10- above 20- above 30-day MA.
2) MACD is flat with room to go up.

Case #3 Oct 2005:

1) GOOG has its MAs intermingled, trying to sort out directions before earnings, with 30-day MA heading slightly up

2) MACD flat with room to go up

Case #4 Oct 2006:

1) GOOG is just below the 10-day MA with the MAs in bullish formation: 10- above 20- above 30-day MA.
2) MACD is flat with room to go up.

Case #5 APR 2006:
I pulled this on out of the cronological order, as a special case, because although it did jump right after the earnings, but, it didn't continue further. Let's analyze its characteristics:

1) GOOG sits above all the daily MAs before the earnings with the MAs in bullish formation: 10- above 20- above 30-day MA.
2) MACD is flat, but with little room to go up.

So, what's my conclusion about the pattern of favorable earnings reaction on GOOG, if there's a pattern to find?

1) We're looking for the daily MAs to show a bullish trend, most desirably with 10- above 20- above 30-day MA

2) If GOOG does jump, in order for it to continue to go up after the earnings has come out, the MACD needs to show room to go up, preferably flat with slightly up indication before the earnings.

Now, what do we have presently? We already know that GOOG shows a bullish bias from the studies of both daily and weekly charts. But, does the present situation show the characteristics of a possible, bullish reaction to earnings?

1) GOOG sits above all the daily MAs before the earnings with the MAs in bullish formation: 10- above 20- above 30-day MA.
2) MACD is flat with room to go up
Here's the present 6-months chart to show that MACD has lots of room to go up still!

So, I think the present situation shows that we have a pretty good chance to see bullish reaction to GOOG's earnings this week. Also, a sharp observer might have noticed that all the bullish earning seasons are in April and October, and, every April and October has brought jumps in GOOG's stock the day after earnings! Now, it's April! We'll have to see how GOOG trades in the days preceding the earnings report and see if the "bullish-earnings-reaction" characteristics hold up before the report comes out.

Happy trading!