Alphabet Inc. (NASDAQ:GOOG) Stock Investors Shouldn’t Sweat Antitrust Spotlight
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) stock price has lagged the S&P 500 in 2019 despite some impressive growth numbers. One of the biggest reasons investors are skeptical is due to concerns about antitrust action.
Antitrust fears were stoked last week on reports of two new big tech probes by 48 U.S. state attorneys general. While the antitrust news may create headline volatility in the near-term, it’s nothing for GOOGL stock investors to be concerned about in the long-term.
Here’s a look at exactly why investors are worried and why they shouldn’t be.
New Google Probes
Texas Attorney General Ken Paxton confirmed this week that he is leading 47 other state attorneys general in a bipartisan antitrust investigation of Google. The probe is reportedly focused on Google’s dominance in online advertising and its use of consumer data.
The new state investigation comes after the Wall Street Journal previously reported that the Department of Justice is conducting its own antitrust investigation of Google.
On the surface, antitrust investigations are serious business. The Federal Trade Commission (FTC) has already fined Google for mishandling user data. But antitrust violations could potentially result in changes to Google’s core algorithms or even a breakup of the company.
Analyst Take on Alphabet Stock
The good news for GOOGL stock investors is that it seems extremely unlikely regulators will actually break up Google or any other big U.S. tech companies. Wedbush analyst Daniel Ives says the investigations are most likely just noise.
Politicians and regulators are mostly just responding to outspoken critics of the big tech platforms. Ives says fines and potential forced changes to Google’s business model are likely the worst-case scenario for Alphabet stock. Ironically, he says a forced breakup might unlock shareholder value.
“We continue to believe on a SOTP basis the valuation for names such as Amazon, Google, and Apple would be re-rated higher in the unlikely scenario there were ever significant business model breakups, such as the separation of AWS from Amazon’s retail e-commerce business,” Ives says.
For Alphabet, a potential antitrust breakup could include a forced spin-off of YouTube, for example. But if Ives is correct, separating the high-growth YouTube from Google’s core search business could lead to a much higher valuation of YouTube.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 1,170.88.
The projected upper bound is: 1,301.50.
The projected lower bound is: 1,165.08.
The projected closing price is: 1,233.29.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 85.9565. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 60.99. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 33 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 111.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.
Rex Takasugi – TD Profile
ALPHABET INC C closed down -8.260 at 1,231.300. Volume was 28% below average (neutral) and Bollinger Bands were 21% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,210.18 1,179.20 1,137.72
Volatility: 21 37 34
Volume: 1,314,972 1,411,861 1,542,138
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
ALPHABET INC C is currently 8.2% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of GOOG.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on GOOG.O and have had this outlook for the last 5 periods.
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