What's Next for Alphabet? Tesla's Fate

The last time we had a time/price setup in Alphabet was late March and a $133.54 rally followed a hold of that key support decision. This took us into the earnings crapshoot last week which I always avoid. So what's next? Let's take a quick look at the daily GOOGL chart and what's it's telling us now. When I saw GOOGL plummet, one of the first things I wanted to look at was if there were any Fibonacci timing cycles that would suggest the next possible low. I found a few trading day cycles that came in between 5/1-3 and I also ran the calendar day timing histogram which gave me similar cycles for a low (These cycles are illustrated by the histogram below the daily chart). Besides the timing for a low, GOOGL was approaching some key price support parameters at the same time. It was not a perfect hit of the $1157.18 level, but it was close enough to take buy signals against with the low being made at the $1158.33 level. I have to consider the 5/2 low key and pivotal at this point since time and price parameters were evident there. I also have to think that IF this low is any good that we have the potential for at least a corrective rally in this name that could take us to the $1221 area at a minimum and maybe MORE if this low is more important. So what would more be? My typical target is always the $1,272 extension of the swing into the zone which gives us a much bigger picture target at the $1334.69 area. When am I wrong on this particular scenario/setup? I'm wrong if we take out the 5/2 low at this point. Bottom line, as long as GOOGL stays above the 5/2 low, I'm willing to take buy signals and will look for higher prices. There are many passionate arguments over the fate of Tesla lately. There is absolutely a case for both sides here as far as market technicals are concerned. One setup is a counter-trend trade, and the other is a trend setup. Most traders will look at a daily chart and say that the bearish pattern of lower lows and highs will prevail as that is the path of least resistance. When I see that, I will typically have my traders look at short sales on a pullback within this bearish pattern IF they see the appropriate sell triggers against the pullback zones. (Option strategies are the best way to go for the short side.) That does make sense right? I have to agree that the path of least resistance favors lower prices and that a short against my resistance zones is a trend setup...but does that mean the bearish trend will definitely continue? The answer is NO. Looking at the weekly chart of TSLA provides another potential scenario. Let's also look at the bullish case in this stock so we understand both sides of the argument. Even though the bearish trend is intact on the daily chart, TSLA is currently testing some very important WEEKLY support at the $224.03-$229.12 area. At the same time this support is being tested, I also have some Fibonacci time factors that are also suggesting a bounce. Since all the moving averages are on the side of the bears at this point, along with the bearish pattern, I would have to consider any buy side entries counter-trend. Counter-trend trades are never going to be the highest probability setups, but there are traders that are willing to take them as long as there is clear definition of risk. There were buy entries this past week for this counter-trend scenario via the 30-minute chart which you will see below. The first trigger occurred when the 8/34 ema crossover was seen after TSLA held the weekly support. The only problem for this bullish scenario is that we are now testing important resistance on the way up where the rally is more likely to fail. So how do you play this? Well if you are long TSLA it's already time to start ratcheting up stops on long positions. You would at least want to have a breakeven stop in place. If TSLA can clear key price resistance, then this rally can continue to even higher levels. Now if we see a failure against the levels provided below on the daily chart instead, followed by a 15 or 30 minute chart sell trigger...I would ditch all long positions and look at the short side by buying some puts or vertical put spreads and define my risk above the key resistance. For more information on how to use triggers for entries, please watch this video. This 30-minute chart below shows where the buy trigger fired off after holding key weekly support. (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.)

What's Next for Alphabet? Tesla's Fate

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