As readers know, Apple (AAPL) - Get Report and Amazon (AMZN) - Get Report are basically flat so far this year as both stocks continue to consolidate. The hope is that they will break higher at some point and help keep the market churning higher.
So that begs the question: Can the winners keep on winning? Specifically, can Alphabet repeat as a six-month performance champ? Let’s look at the chart.
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In trading, there are a few rules. But the two most basic ones are don’t fight the Fed and the trend is your friend.
As the Federal Reserve remains incredibly dovish, the overall trend of the equity markets remains higher. In the specific case of Alphabet stock, the trend is also higher. There’s no point in shorting it or fighting it until that trend breaks.
Notice the stock’s tendency to consolidate for several weeks or months at a time, then push to new highs. That usually corresponds with a test of the 50-day moving average.
So until that measure fails as support - or put another way, until that “trend bends” - we must respect the overall direction. Plus, Alphabet is a great company, so there’s even less reason to bet on its demise.
In that sense, buyers will likely step in to defend the 50-day moving average should we get a decent pullback in the stock. Keep this measure in mind.
From here, I’m interested in seeing if Alphabet stock can climb to $2,500. If so, the $2,533 level becomes of interest, as does the $2,590 area.
While a repeat gain of 40% in the second half is unlikely to happen, it’s possible Alphabet could continue to run ahead of the pack. It’s also possible that we see some money rotate out of the stock and into the laggards, like Apple and Amazon.
Just keep the trends in mind, but just because the calendar flipped doesn't mean Alphabet stock will.