Chart of the Day: Alphabet Needs a 'Shake Down' of the Bears
Are earnings and guidance already priced in?
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After the close of trading on April 24 we'll hear from Alphabet GOOGL and how their first quarter finished up. Did it go according to plan or were the distractions too much to overcome?
Certainly the worries present with tariffs and a potential recession in the U.S. economy are a concern, but macro issues are far more important. The stock has been in a solid downtrend for a few months, with lower highs and lower lows along the way. That is our textbook definition of a downtrend.
Yet, it appears the stock is trying to carve out a bottom. We're not calling it just yet but that big selling that hit GOOGL in early April appears to be solid.
We now have a budding uptrend with a higher low on the chart yet resistance at each level. What is really needed is a "shake down" of the bears, which would mean a big gap up to trap the short-sellers and force a squeeze.
That is hopeful, however, and not predictable, though the indicators are mixed to mildly positive. MACD (moving average convergence divergence) is on a tentative buy signal here, and notice the parabolic SAR (stop and reverse) in the top pane is bullish (dots), but the candles are pink/purple. That tells us the chart is bearish on the GoNoGo composite of indicators.
Momentum is starting to turn up but is running into resistance (stochastics, pane 4).
All in all, Alphabet is set up to do well if the company presents a positive surprise with earnings. If not, then a test of the April low is next.
We like Alphabet in TheStreet Pro Portfolio and rate it a One, or "buy at anytime."
At the time of publication, TheStreet Pro Portfolio was long GOOGL.
