Shares of Alphabet (GOOGL) (GOOG) opened higher by 1.7%, rallied 1.84% at the session high and is now fading lower, down slightly on the session.
That’s as earnings are due up later today, after the close on Tuesday. Alphabet won’t be alone, though.
Advanced Micro Devices (AMD) will also report after the close and will be closely watched by investors.
After Apple (AAPL) reported better-than-expected results last week, the stock has been on a tear. Prior to this report, not many stocks had been trading higher on earnings.
Part of that is because we were in the early part of earnings season. The other part is because investors were selling just about everything in mid-January as the markets were in a painful slump.
At one point amid the selloff, investors wondered whether Alphabet and a handful of other FAANG components were now value plays.
At today’s high, Alphabet was up more than 10% from last week’s low. Does that complicate the earnings trade?
Yes.
Trading Alphabet Stock
Chart courtesy of TrendSpider.com
Alphabet stock has been trading much better lately. If it finishes higher today, it will mark the stock’s third straight daily gain and fifth gain in the past seven sessions.
After some wavering on the pullback, the weekly VWAP measure and the 50-week moving average ended up holding as support.
On the ensuing rebound, Alphabet stock was able to reclaim the fourth-quarter low at $2,621 — which was acting as resistance — and power back through the 10-day and 200-day moving averages.
It was quite an impressive rally. However, shares are stalling at the 50% retracement of the current range, which is not too surprising ahead of a big event and amid a large decline.
From here, bulls desperately want to see to Alphabet stock hold the 10-day and 200-day moving averages. If it can, it allows them to remain in control.
A break of the fourth-quarter low that’s not reclaimed creates a situation where the bears can regain control and it could put the $2,500 low back in play.
On the upside, the $2,820 to $2,840 area is of major interest.
That’s where the 61.8% retracement comes into play, along with the 21-week and 50-day moving averages and the daily VWAP measure. Above that and $2,900-plus is in play.
