Alphabet Inc. (GOOGL) reported fourth-quarter results Monday night that beat expectations on earnings but missed on revenue. GOOGL is trading lower Tuesday morning so let's check out our trends and indicators to see if this pullback is normal or something else we need to be focus on further.
In the daily bar chart of GOOGL, below, we can see that prices have been in a strong uptrend from early June. GOOGL has stayed above the rising 50-day moving average line and the rising 200-day moving average line for months.
The daily On-Balance-Volume (OBV) line has also risen from June telling us that buyers of the stock have been more aggressive than sellers. This action confirms the price strength and augurs for more in the days and weeks ahead.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has stayed above the zero line since July and is currently in a take profits mode.
The weekly bar chart of GOOGL, below, is the picture of bullishness. Prices have been in an uptrend for the past three years (and longer). Prices are above the rising 40-week moving average line.
The weekly OBV line shows a new upleg from September to support the price gains. The MACD oscillator is in a bullish alignment above the zero line with no hints of narrowing.
In this first Point and Figure chart of GOOGL, below, we can see a potential upside price target of $1,615 being projected. A decline below $1,416 could weaken the chart a little.
In this second Point and Figure chart of GOOGL, below, we used weekly close-only data, which produces a potential longer-term price target of $1,817.
Bottom-line strategy: GOOGL opened around 4% lower Tuesday morning but this dip is probably a buying opportunity. Existing longs and new buyers should risk two consecutive closes below $1,410. The $1615 area and then the $1,817 are our next potential price targets.
(Alphabet is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL? Learn more now.)
