Alphabet Could See More Downside Slippage - Serious Weakness Not Likely

 | Sep 14, 2018 | 10:37 AM EDT
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Stock quotes in this article:

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Alphabet Inc. (GOOGL) was reviewed in July where I wrote that "My recommendation: Stay long, with a $1,100 investing stop and a $1,170 trading or short-term stop. Your price targets from the charts above should be $1,300 -- and then $1,439."

With our trading stop being tested as prices are down from the late July zenith a fresh look at GOOGL is in order.

(For more on GOOGL, see The Apple Revolution: Cramer's 'Mad Money' Recap.)

In this daily bar chart of GOOGL, below, we can see that prices have been below the still rising 50-day moving average line all month so far. If this continues we should see the average line turn lower.

The 200-day moving average line intersects around $1,125 - not all that far away.

The daily On-Balance-Volume (OBV) line has been weakening the past six weeks and indicates that sellers of GOOGL have been more aggressive with heavier volume being traded on days when the stock has closed lower.

In the bottom panel is the 12-day price momentum study which does not indicate that the pace of the decline is slowing.

In this weekly bar chart of GOOGL, below, we can see that prices are still above the rising 40-week moving average line but GOOGL has tested the 40-week average in the past and could do so again.

The weekly OBV line looks like it is rolling over the past two months and the weekly Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside.

This crossover is a signal to take profits in an uptrend.

In this Point and Figure chart of GOOGL, below, we can see a downside price target of $1,134. That sort of decline, should it happen, would test the 200-day and 40-week moving average lines.

Bottom line strategy: GOOGL might experience some more downside weakness but I do not see a serious decline from the charts now.

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