However, the move was short-lived. On Thursday, the gains wee unwound, with shares down more than 5% and teetering on short-term support.
Bulls are grappling with the depth of this current pullback. At the session low, the Nasdaq was down about 5.2% on Thursday, while the S&P 500 was off 3.5%.
Is it a one or day dip or are we looking at something more substantial? At this point, there’s no way to tell. We need to get an idea of the market breadth and investors need to watch for key short-term support levels to break or hold.
Traders must be willing to change gears when necessary, but let’s not be overly quick to bet against the trend, which is still to the upside.
For Alphabet, there are a few key marks to keep an eye on. With that in mind, let’s take a closer look at the charts to see where they are.
Trading Alphabet Stock
Alphabet stock has not been booming to the upside like some of its mega-cap peers. Specifically, it has lagged names like Apple (AAPL) - Get Report, Microsoft (MSFT) - Get Report and Amazon (AMZN) - Get Report.
However, the stock was able to break out to new highs in July. After consolidating, Alphabet stock then broke out over short-term downtrend resistance (blue line) and ripped to new highs once again.
Ideally, bulls will see the 10-day moving average hold as support, followed by Alphabet stock reclaiming short-term resistance and the 123.6% extension near $1,654.
Back above that zone will put the current high at $1,726.10 and the 138.2% extension in play at $1,730. Above that and the 161.8% extension is on the table at $1,853.
Currently though, that feels like a tall order. For now, let’s see if the 10-day moving average holds as support. We don't need to be in a hurry to trade this one — we can see how the charts set up, first.
Should the 10-day fail as support, it puts the July high in play at $1,587, along with the 20-day moving average. If the selling really accelerates, let’s see if we test the 50-day moving average and the July breakout level near $1,460 to $1,470. Below that and we could see an acceleration in the selloff.