Alphabet Inc. (NASDAQ:GOOG) will have an AWS moment like Amazon did
While June has not been kind to Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) stock so far, time will attest that it’s a gem in disguise. Every now and then, we get a stock that is a sure thing, and Google stock fits the bill.
This is a company that completely revolutionized the way the world uses the internet. I remember the early days when I had to explain to my friends what “Googling it” meant. Now it’s the behemoth of search, among other things.
The Monday madness made for a perfect place to go long in GOOGL stock.
Companies that are so successful become vulnerable to regulatory scrutiny. Microsoft (NASDAQ:MSFT) was the high profile modern example of this. Now it’s GOOGL’s turn.
For years we’ve seen the headlines of fines from the E.U., but more recently the attacks came onshore. The U.S. political rhetoric took a step up since the Facebook (NASDAQ:FB) Cambridge Analytica incident. Now, attacking the mega-cap corporations has become a popular soapbox for politicians to run their campaigns.
But, on Monday, this took a wild turn.
We had a flurry of headlines targeting GOOGL, Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and FB. This caused the Nasdaq Composite to fall 2.2% as the FANG and AAPL collective, which makes up about half of the index, fell 5%.
Those who went long puts into GOOGL and AMZN fears Monday made a fast profit as the turnaround came quickly after on Tuesday.. For example, if you sold the GOOGL March 2020 $800 put or the January AMZN 1200 puts, then you profited $6 per contract in a matter of hours.
But is the rally over? No. The opportunity is still available.
The FANG collective fell 5% on Monday, but the bounce was only 2% on Tuesday. So there is plenty of short-term upside left, but, more importantly, there is plenty of long-term upside in GOOGL stock.
The important part of this bullish thesis is that as big as Google is, it is only monetizing one aspect of its operations. It still has billions of active users that are ripe for the picking. So the upside potential is massive.
This is not to mention other ventures that are outside of its current scope. Take Waymo for example. This is the company that will probably be first to bring autonomous driving to the world. Google owns it so they have a front seat to that new world. Imagine the applications that GOOGL software can incorporate into those for its brands and competitors.
From that perspective, GOOGL is starting to resemble AMZN except at a fraction of the cost. Google sells at a price-to-earnings ratio of 25X, which is three times cheaper than that of AMZN. This is nothing against AMZN, but the point is to highlight the bargain that Google stock is now. This is a position I would hold for the long term.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 1,152.66.
The projected upper bound is: 1,103.11.
The projected lower bound is: 975.30.
The projected closing price is: 1,039.20.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.
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 17.1828. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 14 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 28.21. This is where it usually bottoms. 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 25 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 -148.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 10 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 sell 25 period(s) ago.
Rex Takasugi – TD Profile
ALPHABET INC C closed down -10.830 at 1,042.220. Volume was 42% above average (neutral) and Bollinger Bands were 52% wider than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1,102.94 1,177.97 1,129.28
Volatility: 38 35 35
Volume: 1,872,243 1,538,014 1,650,934
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 7.7% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of GOOG.O (mildly bearish). Our trend forecasting oscillators are currently bearish on GOOG.O and have had this outlook for the last 23 periods. Our momentum oscillator is currently indicating that GOOG.O is currently in an oversold condition.