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.
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.