Sunday, February 25, 2007

Inquiring Minds Want To Know

Bullish Jim asks the question - why would anyone buy YHOO over GOOG? And then he makes a fundamental case for GOOG versus YHOO and GOOG wins hands down.

I say if I look at these two charts side by side it is obvious which one I'm going to buy - I'm going to buy the one with the most momentum. The trade for the last 18 months has been buy the dips - sell the rips and until that changes that's how you should play.



GOOG looks like it is flattening out after its recent move to 500. Of course after a strong down month it usually has a strong up month so March may be a lot better for it. Another thing to look at is the way the volume is just dropping off so severely. I think everyone who needs to own GOOG owns GOOG and there is very little retail or wholesale interest at this time.



YHOO on the other hand is just coming out of a dip and is now showing a cross over formation. There's a good possibility that YHOO might pull back after two strong months so be ready if that starts happening. Notice that the volume in YHOO, while not as large as GOOG stays relatively stable.

5 comments:

Bullish Jim said...

Good illustrations. For what it's worth I think Yahoo is a great trader's stock but a really mediocre company. It is a bad stock to hold through earnings and I have a couple of losses in the past to show for it. I think someone would be nuts to buy and hold YHOO.

Google on the other hand is actually an investor's company. But its stock has moved too sluggishly for the past year and it the $460 share price is too bloody high for trader's to bother with it. Until they split the shares I think GOOG's multiple might contract to the point where the value guys will consider it. That's obviously a ways off at this point...

Even when I start a blog focused on short term trading I can't stop thinking about fundamentals. :)

Bullish Jim said...

...and I know you're giving the perspective of the short term trader on this issue. That said, if you bought GOOG at the dip in Feb 2006 and sold at or near the $510 high 9 months later you could have had a 50%+ gain. It's not volatile but the bias is still upward.

Yahoo on the other hand gives you the volatility and drama of a good swing trader. I would also argue a lot more risk.

Marlyn Trades said...

Not going to argue your points because they are all good - But right now the momentum is in YHOO's court. And that is the only reason I can give or did give to buy YHOO now.

Bullish Jim said...

Fair enough. For the record you're 100% right re current momentum. Yahoo is flying and GOOG is sleeping...

QUALITY STOCKS UNDER 5 DOLLARS said...

Sounds like one that I have heard before.