While news of the company's $175 million settlement with the FTC initially sent shares higher in early trading, investors weren't bidding the name up with a frenzy of optimism, as Alphabet lagged the Nasdaq. That's as attorney generals from more than half of the U.S. states are prepping a probe into Google's business practices.
So as one investigation comes to an end, another begins. It doesn't help that the DOJ is investigating Alphabet, Amazon (AMZN) - Get Report , Facebook (FB) - Get Report and Apple (AAPL) - Get Report for antitrust concerns.
The regulatory front is certainly becoming more heated for mega-cap tech companies, although it's not as if these specific companies aren't used to the scrutiny. The question for investors is, should they buy Alphabet on this concern?
Trading Alphabet Stock
Interestingly, Alphabet stock has a verysimilar setup to the overall market. That is, it has been range-bound for the past month, while uptrend support (blue line) gently guides the price higher.
That's not exactly bad news for the bulls, although in Alphabet's case, they probably feel that the stock deserves to be higher. Why's that? Well, Alphabet crushed its quarterly estimates when it reported earnings in late July. Further, its balance sheet is starting to show serious muscle, with cash and cash equivalents weighing in at $121 billion.
Not only is that up impressively year-over-year -- an increase of 18.4% -- but it gives Alphabet one of the strongest balance sheets in the world. That should create demand for the stock, and opportunity for bulls on larger declines.
Now, will we get those larger declines?
Should Alphabet stock lose the 50-day moving average and uptrend support, a decline into the $1,135 to $1,140 range could be in store. In that area, it will find both the 50% retracement and the 200-day moving average.
Should this area fail to support GOOGL stock, the 61.8% retracement near $1,100 could follow. Below that, sub-$1,040 is possible and a great buying opportunity for long-term investors.
On the upside, investors need to see if Alphabet stock can clear $1,200, which has been range resistant for more than a month now. Above it and the post-earnings high at $1,268 is on the table.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.