Amazon (AMZN) - Get Amazon.com, Inc. Report , Facebook (FB) - Get Facebook, Inc. Class A Report and Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report are all higher after reporting their quarterly results, whereas Alphabet stock is down more than 8.5% after its report. Shares are down more than $100 apiece to $1,189 as investors digest a bottom-line beat and a top-line miss. Revenue of $36.34 billion managed to grow more than 16.5% year-over-year, but missed estimates by more than $1 billion and seems to cause the most worry among investors.
The report wasn't all that encouraging and many are now wondering if this price action will spark a rotation out of Alphabet stock and into the other FANG names that are doing well. Let's take a look at the charts.
Trading Alphabet Stock
When sizing up Alphabet's 8.5% post-earnings decline, investors need to decide if the tumble is a warning sign for more potential losses or a long-term opportunity. The quarter is definitely raising some questions around Wall Street, as analysts try to decipher whether this is a one-time issue or the start of a new trend.
Let's remember, though, Alphabet stock wasn't exactly disappointing heading into earnings. Shares were pressing $1,300 apiece, hitting new all-time highs and were overbought going into the report. With Tuesday's decline, the stock is unwinding that overbought condition, albeit in a less-than-ideal manner.
Alphabet stock gapped below the 20-day and is currently below the 50-day moving average. That's not encouraging for bulls and opens up a test of larger support levels. We can see those on the longer term weekly chart below.
Will $1,150 step up as support? That's about $35 below current levels, but it holds the 50-week moving average and the 200-day moving average. This area has been notable in the past too, highlighted by the black horizontal line on the chart above.
Should GOOGL stock fall that far, it will be down roughly 11.5% from its highs set on Monday. On both charts, we can see that Alphabet stock is now below uptrend support, so it's imperative that we wait for GOOGL to either find new support or reclaim prior support levels.
Back over the 50-day moving average and over Tuesday's post-earnings highs could get some momentum going in bulls' favor. If that's the case, look for a retest of prior uptrend support and possibly the 20-day moving average.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.