Here's What the Charts Tell Us About Amazon and Alphabet

Ed Ponsi

Since the start of the September, some of the biggest names on the Nasdaq have taken a hit. Two of the very biggest are Amazon and Alphabet, which is the parent company of Google. What are the charts telling us right now about these two giants?

comparison chart
Dow Jones Industrial Average vs. S&P 500 vs Nasdaq. Chart via TradeStation

The first thing to understand is that money appears to be leaving some of the bigger names on the Nasdaq and flowing into some old-school blue chip stocks. To visualize this, check out the performance for the month of September for the major indices. 

While the Nasdaq, in blue, has lost over 10% since the start of the month, the Dow Jones Industrial Average, in red, has lost just over 2%. 

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Coca-Cola chart via TradeStation

Where is the money going? Into names like Coca-Cola, which has been grinding higher as the markets pull back. Coke recently broke out of a bullish formation called an ascending triangle. 

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Amazon chart via TradeStation

Compare that chart to Amazon, which is breaking down. Amazon has fallen below its bullish trend line and is trading beneath its 50-day moving average, in blue. On Thursday, the stock hit its lowest price in nearly two months, and fell below the psychologically significant $3000 level.

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Alphabet chart via TradeStation

Alphabet's chart has a very similar look. This stock has broken below its trend line and its 50-day moving average. On Thursday, Alphabet closed below $1500 for the first time in over a month, and traded at a six week low. 

If you're holding Amazon and Alphabet for the long run, you're probably happy with your returns. But if you're looking to buy either of these names for a trade, you'll probably be able to do that at a lower price in the near future. 

Bottom line:Right now, those boring stocks that your parents held for 20 years are the place to be. For now, I'd rather be in Coke and Verizon than Amazon and Alphabet.  

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Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.