Here's Why You Should Avoid the Long Side of Alphabet

Let's see how the stock looks on the charts.

In my last review of Alphabet (GOOGL) on October 25, I wrote that "I have no special knowledge of what GOOGL will report to shareholders Tuesday evening but the charts and indicators are not positioned for a sustained advance." Prices skidded lower into early November before declining again.

Let's check the patterns again. 

In this daily bar chart of GOOGL, below, we can see that as the New Year approaches GOOGL is trading below the declining 50-day moving average line and below the declining 200-day line. Trading volume has been modestly higher since late October.

The daily On-Balance-Volume (OBV) line has been weak all year as sellers of GOOGL have been more aggressive than buyers.

The Moving Average Convergence Divergence (MACD) oscillator is back below the zero line in sell territory where it has been for much of the past year. 

 

 

In this weekly Japanese candlestick chart of GOOGL, below, I still see a weak picture. Prices are in a downward trend as they trade below the negatively sloped 40-week moving average line.

 

I do not see any bottom reversal pattern and the weekly OBV line is still pointed lower. The MACD oscillator is struggling below the zero line. 

 

 

 

In this daily Point and Figure chart of GOOGL, below, I see that the software is projecting a downside price target in the $81 area. 

 

 

 

In this second Point and Figure chart of GOOGL, below, I see a potential price target in the $73 area. 

 

 

Bottom line strategy: The charts and indicators of GOOGL suggest the November low should be tested and probably broken in the weeks ahead. Avoid the long side of GOOGL. 

(Alphabet is a holding in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells GOOGL? Learn more now.)

Employees of TheStreet are prohibited from trading individual securities.