Google (GOOG) may be in process of forming a double bottom. It's too early to tell, but not too early to start watching. From what we can see so far, all the indicators are there. Check out the chart below.

The blue horizontal line at the bottom shows the previous bottom in March, approximately 43% below last December's high. Last week's low dipped its toe just below the surface of that line, which is exactly how a double bottom should act.

Furthermore, the middle peak of the formation in April rises a bit above the midpoint between the high and low (the midpoint is near $568), another sign of a strong double bottom formation.

What to watch for

Like I said above, it's way too early to place any bets yet. For one thing, the market is still in a correction, despite (or perhaps because of) last week's socialization of the MacMae twins (for more analysis of last week's market action, see Dave's weekly review). Additionally, the second bottom of the base is still fetal – the next week or so could show a further decline below the March low, in which case all bets are most likely off.

But we will definitely keep a close eye on things. Here's what we are looking for:

1. A steady rise in GOOG's price over the next few weeks toward the midpoint of the formation.
2. A general stabilization of the market, with some days of generally strong performance (rising prices and volume on the major indices)

If both of these events happen, GOOG may once again become a stock worth holding.