Last evening in San Francisco during Jim Cramer's on location version of Mad Money, he talked about the members of FAANG. Cramer said there was no reason not to own Alphabet (GOOGL) (and Amazon (AMZN) too).
While no one really knows how things are going at Google, the stock is inexpensive and the company has piles of cash it can put to work, Cramer added. Let's check out the charts and indicators.
In this daily bar chart of GOOGL, below, we can see a broad sideways market the past year. There is a strong rally from $1,000 and then a return to the same level late in the year. The indicators look to be improving the past two months or so and this could support gains in the weeks ahead.
GOOGL is now trading above the flat 50-day moving average line. Prices are below the declining 200-day line and a rally in early December failed at the under side of the longer-term indicator. The next test of the 200-day line could be successful.
The daily On-Balance-Volume (OBV) line declined from August to November, signaling more aggressive selling but the line has been stabilizing since November. A turn higher for the OBV line will be a plus for the bulls.
The trend-following Moving Average Convergence Divergence (MACD) oscillator shows improvement from late October and is now crossing the zero line for an outright buy or go long signal.
In this weekly bar chart of GOOGL, below, we can see that prices are below the 40-week moving average line but the slope of the line has turned up in recent weeks.
The weekly OBV line shows a decline but sideways to higher movement of the line has broken that bearish pattern.
The weekly MACD oscillator has been narrowing and could soon generate a cover shorts buy signal.
In this Point and Figure chart of GOOGL, below, we can see an upside price target of $1,229. This is not a new high but it is a very good start.
Bottom line strategy: A close above the December high will strengthen the picture for GOOGL. I think that will happen. Aggressive traders that can afford to risk below $1,050 could trade the long side of GOOGL. The $1,225-$1,240 area is my price target for now.