Internet content giant Alphabet Inc. (GOOGL) has had a volatile ride all year, with ups and downs that have stabilized at or just below its 200-day simple moving average. As 2018 began, Alphabet shares traded as high as $1,198.00 on Jan. 29. At that time, the weekly chart showed the stock as an "inflating parabolic bubble." This warning led to a correction of 16.8% to a low of $997.00 on Feb. 9. This proved to be a buying opportunity, as the 200-day simple moving average of $1,003.38 held at this low.
Alphabet stock rebounded by 18.2% from this low to a secondary high of $1,178.16 set on March 12. The downside was not over, as the stock declined 16.5% to its 2018 low of $984.00 set on March 26. Between March 26 and May 4, the stock traded back and forth around its 200-day simple moving average as it rose from $1,024.11 to $1,034.69, respectively, which proved to be a buying opportunity. From the low, the stock rose by 16% to its all-time intraday high of $1,201.49 set on June 20. Shares of Alphabet closed at $1,141.29 on Thursday, up 8.3% year to date and up 16% from the March 26 low of $984.00 set on March 26. The stock is 5% below its June 20 high. (See also: Alphabet Has Been Holding Key Levels All Year Long.)
The daily chart for Alphabet
The daily chart for Alphabet clearly shows the importance of a rising 200-day simple moving average, which shows an uptrend, as the stock began the year above a "golden cross," indicating that higher prices would occur. Note the numerous buying opportunities on weakness to the 200-day simple moving average. The lowest horizontal line is my annual value level of $966.02. The stock is between the upper two horizontal lines, which are my semiannual and monthly pivots of $1,101.14 and $1,142.47, respectively, and the upper level was tested on Thursday. Above the chart is my quarterly risky level of $1,229.05.
The weekly chart for Alphabet
The weekly chart for Alphabet is positive, with the stock above its five-week modified moving average of $1,125.18. The 200-week simple moving average, or the "reversion to the mean," is at $800.35. This average was last tested during the week of Oct. 7, 2011, when the average was $249.87. The 12 x 3 x 3 weekly slow stochastic reading ended June at 75.93, up from 73.33 on June 22. A close below $1,125.18 today would downgrade this chart to negative.
Given these charts and analysis, investors should buy Alphabet shares on weakness to my semiannual and annual value levels of $1,101.14 and $966.02, respectively, and reduce holdings on strength to my quarterly risky level of $1,229.05. (For more, see: 5 Global Bargains That Can Outperform.)