After delivering strong earnings and revenue, both of which topped expectations, shares have risen about 4% on the day. The stock was up as much as 8% at the session high.
Unfortunately, Apple (AAPL) - Get Report, Amazon (AMZN) - Get Report and Facebook (FB) - Get Report are all down about 4% to 5% on the day. Despite reporting what appear to be solid quarters, Wall Street collectively has decided to sell the stocks.
That leaves Alphabet investors in a tough spot. Do they commit more capital to the lone outperformer on the day or do they stand on the sidelines in case Alphabet also gets caught up in the selling?
Let’s have a look at the charts to help determine the answer.
For those looking at the Alphabet chart and thinking it looks quite similar to Apple, that’s because it does. While both are having the opposite reaction to earnings on Friday, both stocks have been forming a wedge pattern (blue lines).
That’s after tech stocks collectively surged to new highs in August, peaked in early September and bottomed a few weeks later.
While the rest of FAANG is slipping on the day, Alphabet stock is higher. It opened for trading near $1,667, sending it over this month’s previous high, as well as wedge resistance.
However, shares are now retreating as selling picks up pace in the broader market and its peers.
As long as shares are below the prior October high at $1,634, it's hard to commit additional funds, (assuming traders are focusing on the short term). Below this mark and Alphabet risks filling its earnings gap down toward $1,555.
In that case, it would put the 50-day and 100-day moving averages on the table. The latter was support earlier this week.
Below $1,500 and Alphabet would also lose wedge support, putting the $1,400 to $1,425 area in play. I don’t think we get here without more broader market selling. After all, Alphabet stock is the only FAANG component trading higher on Friday — its relative strength is clear.
That said, $1,400 or even lower is possible should the stock market’s decline pick up speed.
On the upside, I want to see Alphabet over the $1,633 mark, the prior October high. That puts the post-earnings high in play at $1,681, followed by the all-time high up at $1,726.