Go Go Google

From Schaeffer's

Google


It is no secret that after its rather rocky reception with Wall Street analysts, Google (GOOG: sentiment, chart, options) has become quite the favorite among traders and the investing community. The shares have tagged another new all-time high today, skipping more than 1.4 percent higher to hit an intraday high of 397.47. Driving today's advance is news that GOOG will offer features similar to computers on cell phones, according to a media report. Making this move possible for GOOG is a deal between Yahoo! (YHOO: sentiment, chart, options) and SBC Communications (SBC: sentiment, chart, options) , which are introducing a cell phone that will link services to YHOO users' accounts, address books and preferences, according to The Wall Street Journal. GOOG is said to be tailoring some of its services for use on wireless devices, and starting today users of more than 100 types of cell phones can access the firm's map database.

Technically, the shares have been phenomenal, rising along the support of their 10-week and 20-week moving averages since April. A look at the chart below is all you need to digest the impressive gains that GOOG has been able to compile since its IPO in August 2004.




But has all this hype gotten out of hand? GOOG has become the perennial bullish pick among the financial media, with The Wall Street Journal bullishly featuring the stock in a August 18 article titled "Google as -- Get This -- Value Play!" and Fortune featuring the company on the cover of its August 8 article titled "Google!, Yahoo!, and the Future of Advertising."

With sentiment like this flying around on the Street, it is no surprise that 18 of the 24 covering analysts rate the shares a "buy" or better, with nary a "sell" to be found. I don't need to tell regular readers of SchaeffersResearch.com that this leaves GOOG very vulnerable to potential downgrades should this much-hyped firm ever disappoint the Street. Fortunately for GOOG, everything seems to be turning up roses for the time being.

Elsewhere, short interest fell by 11 percent during October to its lowest level since September 2004. It would now take less than one day to buy back the 7.4 million GOOG shares sold short, providing little in the way of short-covering support and casting yet another shadow of doubt over the equity from a contrarian's perspective.

Meanwhile, the options crowd is providing the only bearish investor sentiment to be had on the GOOG. In fact, pessimism has been on the rise among these speculative investors, as the security's SOIR has risen from its October 7 reading of 0.73 in the 27th percentile to today's reading of 0.91 in the 69th percentile.

But as the stock has proven time and time again, the market can remain irrational for longer than you can remain solvent. GOOG continues to post impressive gains and has yet to tarnish the shine that is apparently blinding the Street and a slew of investors. It is this technical performance that has earned the stock a Schaeffer's Equity Scorecard rating of 6.0 out of 10.