On Tuesday after the close, Alphabet reported its first-quarter earnings, blowing out top- and bottom-line estimates. GOOGL stock jumped to new all-time highs in after-hours trading as a result.
Shares are up $109 in pre-market trading on Wednesday, good for a 4.75% gain thus far. With shares set to open at new highs near $2,400, it’s worth wondering if GOOGL stock can maintain momentum.
For the record, I love Alphabet. It has a powerful balance sheet, a great business, reasonable valuation — one might even argue that it’s a low valuation — and excellent assets. On top of that, it’s been the best-performing FAANG stock this year and over the last six months.
So let’s look at the chart.
Danny Riley is Mr. Top Step’s 39-year veteran of the CME trading floor and ran one of the largest S&P desks on the floor. Here’s what he’s thinking each morning before the stock market opens.
Trading GOOGL Stock
Look at the lovely manner in which GOOGL stock has been trading on a weekly basis.
Shares continue to grind higher along the 10-week moving average as bulls remain in control. About a month ago was a great opportunity, with shares tagging the 10-week moving average and then giving us a weekly-up rotation.
In any regard, the stock is set to gap up above the 261.8% extension, drawn from the 2020 correction. The 161.8% extension was respected, but now gapping up over the 261.8% puts us in an interesting position.
I want to see how Alphabet does with this level, near $2,370. Will it dip to it and hold it as support? Will it pull back and close below it? Could there be some divergence on the weekly chart?
There are a lot of questions and an open mind. Above $2,371 — and ideally $2,400 — could put $2,500-plus in play. A green-to-red setup (meaning GOOGL stock gives up its post-earnings gains) leaves it in an obviously-vulnerable position.
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