Chart of the Day – $GOOG vs. $MSFT for Talking Numbers

by Enis November 29, 2012 2:28 pm • Commentary

Here’s a preview of what I’ll be discussing on Talking Numbers today around 3:20 to 3:30 pm EST on CNBC:

Both MSFT and GOOG are up single digits in 2012, but you wouldn’t know it by looking at the 6 month charts.  GOOG has been very strong since June, while MSFT has been quite weak.

I don’t like either of these names here, fundamentally or technically.  MSFT is cheap, but Dan laid out a good case as to why cheap can get cheaper about a month ago, trading a 1×2 put spread that he still holds today.  As for GOOG, it is one of my favorite companies as a consumer.  But the reason for that is that it gives me all its products for free.  With online advertising rates in a continuing downtrend, GOOG could be hard pressed in searching for profitable income streams.

As for the charts, let’s start with MSFT:


This is a 3 year weekly chart of MSFT:



In reality, you could put a 10 year chart of MSFT on here, and it would still basically be just a rangebound chart, with no trend or direction.  MSFT has been dead money, and continues to be dead money, as valuation is cheap enough that it offsets the lack of growth for the behemoth in the last 10 years.  Going forward, I don’t anticipate Windows 8 to be a game changer, particularly given the initial tepid reaction.  I expect the stock to be stuck between 23 and 33 for some time to come.

What about GOOG?  Here’s GOOG’s lifetime monthly chart:



The stock actually broke out to all-time highs in October, above the previous high around 750.  It has since broken down hard after a weak earnings report last month, and that breakout to new highs turned out to be a false breakout.  From failed moves often come fast moves, and we saw GOOG drop more than 100 points from that October high.  I think GOOG is especially vulnerable to further selling as the stock nears the psychologically important $700 level.