The Odds Favor Going Long in Alphabet Stock Again
Over the past few days, Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) has made headlines for several reasons, all of which have helped make GOOGL stock a more appealing play.
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Yesterday, the S&P 500 inched its way higher intraday but closed narrowly lower to finish out the session. After all, everyone is waiting and anxious about this week’s FOMC meeting. Well … almost everyone. GOOGL stock investors were a more cheerful bunch.
GOOGL gained 1.17% on Tuesday, which led to the best close for Alphabet stock since early October when the broader market suddenly experienced an extreme case of technical nausea that led to a major correction.
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Alphabet Inc’s market-defying bid also reinforces bullish supports off the price chart for GOOGL. From the secular growth trend in the cloud and big data of which GOOGL stock is a major player to an imminent Lyft IPO, which Alphabet holds a major stake in, the GOOGL stock price is well-positioned to go higher. The announcement of its Stadia video game streaming platform also added a bit more spice into the mix yesterday.
And with conditions on the price chart looking even more promising after GOOGL cleared some major technical roadblocks, it’s time to get ready to buy Alphabet stock once again.
GOOGL Stock Daily Chart
Back in early January, I likened the price action in GOOGL stock to a bullish “Lucky 7” proposition. The bet on green has paid off with shares rallying a bit more than 10% off the challenge of key price support.
Now, with shares having tacked on a decent gain, Alphabet is once more in position to be purchased with solid support from the price chart. The current setup follows a simple four-day pullback that held above the 62% retracement level.
As many investors know, the 62% resistance level is the last significant Fibonacci level before a challenge of a stock’s cycle high is expected. As such, conditions are looking up for GOOGL.
Furthermore, given that there is no moving average resistance and shares have cleared key all-time-highs set back in January 2018, it’s an even better time to consider buying a potential breakout in Alphabet stock.
GOOGL Stock Trade
For investors agreeable with my bullish point of view, a buy-stop order to purchase Alphabet shares on a breakout above $1207.12 is the best strategy. I’d also recommend using a limit order to guard against any surprise purchases at prices that are less favorable and too far removed from an idealized entry.
As mentioned, the upside looks good for GOOGL stock. The all-time-high is just north of $1,291 and within spitting distance of $1,300. That range is my initial price target for taking profits. On the other hand, with no guarantees in the market other than the opening and closing bells, setting an initial blended stop-loss order below $1,170 makes good sense on more than a couple of levels.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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