Alphabet Inc. (NASDAQ:GOOG) trillion-dollar mark won’t be the end of the near-term gains in stock, according to history
Alphabet topped the $1 trillion mark in market capitalization last week, becoming the fourth technology company — behind Apple, Microsoft and Amazon — to hit this milestone. Alphabet shares have jumped over 10% in the past month alone, and according to recent trading history, there are more gains to come for Google’s parent company over the next month.
According to hedge fund analytics tool Kensho, Alphabet has had similar one-month moves on seven other occasions in the past five years. A month later the trend tends to continue, with the stock gaining another 2%, significantly outperforming the S&P 500 Index.
Reasons for bullishness on Alphabet include its CEO Sundar Pichai, who in December was elevated from running Google to overseeing the parent company after Alphabet founder Larry Page announced plans to step down, along with co-founder and president Sergey Brin.
Another reason Wall Street remains bullish is because the company’s cloud business, still far behind the leader Amazon and second-place Microsoft, doubled its revenue run rate from $1 billion to $2 billion per quarter between February 2018 and July 2019. Though CNBC recently reported on the loss of a big health-care cloud contract, which is in a key market sector of focus for Google’s cloud growth.
Ads are still the lion’s share of Alphabet revenue, but the company is generating more than $8 billion in annualized revenue from the cloud.
Bank of America raised its price target on Alphabet’s stock earlier this month, citing a healthy advertising business.
One wildcard in the next month is Alphabet’s next earnings report, which will hit the market on Monday, Feb. 3. Alphabet came up slightly short of earnings-per-share expectations in its last earnings report in late October, and the stock dipped, though it quickly rebounded with an upward trajectory over the remainder of 2019.
Last spring Alphabet closed its worst post-earnings day since April 2010 after reporting sluggish advertising numbers. The stock dropped 7.5%, shaving more than $67 billion from its market cap.
Investors also have been ignoring government scrutiny and an election year, which could bring in a new administration more hostile to Google’s search business. Probes of big tech are ongoing by the Department of Justice, Federal Trade Commission and state law enforcement, while presidential candidates Elizabeth Warren and Bernie Sanders have said that the companies should be split apart.
Apple and Microsoft are still valued at more than $1 trillion, while Amazon is currently below the trillion-dollar mark. The five most valuable U.S. tech companies now account for more than 17% of the S&P 500, up from 11% in 2015. Some Wall Street analysts are expecting the momentum to slow this year for big tech given the recent gains.
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 1,369.24.
The projected upper bound is: 1,524.36.
The projected lower bound is: 1,454.62.
The projected closing price is: 1,489.49.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 86.6397. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 17 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 81.49. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 23 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 134.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 11 period(s) ago.
Rex Takasugi – TD Profile
ALPHABET INC C closed up 1.550 at 1,485.950. Volume was 20% above average (neutral) and Bollinger Bands were 125% wider 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: 1,446.56 1,355.34 1,224.91
Volatility: 12 16 29
Volume: 1,656,756 1,347,081 1,418,796
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 21.3% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into GOOG.O (mildly bullish). Our trend forecasting oscillators are currently bullish on GOOG.O and have had this outlook for the last 30 periods. Our momentum oscillator is currently indicating that GOOG.O is currently in an overbought condition.
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