Internet content giant Alphabet Inc. (GOOGL) continues to trade up and down seemingly randomly so far in 2018. The stock set its all-time intraday high of $1,198.00 on Jan. 29 and then gapped lower following a negative reaction to earnings released after the close on Feb. 1. Alphabet reported earnings for the most recent quarter after the closing bell on Monday, and the company beat analysts' estimates on earnings per share and revenues. After an initial price pop up to as high at $1,125.00 in after-hours trading, the stock dropped, partly in response to the company’s operating profit margin declining sharply. The after-hours high cannot be seen on the daily or weekly charts.
Alphabet began the year with a weekly chart that showed the stock in an "inflating parabolic bubble" formation. This occurred as its 12 x 3 x 3 weekly slow stochastic reading rose above 90.00 on a scale of 00.00 to 100.00 during the week of Jan. 26. This was my technical warning, and during the week of Feb. 16, the stochastic reading dropped below 80.00, ending the parabolic bubble. Alphabet shares closed at $1,022.64 on Tuesday, down 2.9% year to date and in correction territory at 14.6% below the Jan. 29 all-time high of $1,198.00. The stock set its 2018 low of $984.00 on March 26, which was a test of my semiannual value level of $987.07. (See also: Alphabet: Profits and Expenses Surge in Q1.)
The daily chart for Alphabet
The daily chart for Alphabet shows how the stock set its all-time intraday high of $1,198.00 on Jan. 29 and then traded down to as low as $997.00 on Feb. 9. The stock popped to a secondary high of $1,178.16 into March 12 and then dropped again to its 2018 low of $984.00 on March 26. The next pop was to a lower high of $1,097.51 on April 19. My quarterly pivot of $1,054.64 is shown as a horizontal line that failed to hold on Tuesday. Alphabet stock closed Tuesday below its 200-day simple moving average of $1,032.25 and above the two lower horizontal lines, which are my semiannual and annual value levels of $987.07 and $966.02, respectively.
The weekly chart for Alphabet
The weekly chart for Alphabet is negative, with the stock below its five-week modified moving average of $1,057.74. The 200-week simple moving average, or its "reversion to the mean," is at $773.89. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 30.59, down from 31.24 on April 20.
Given these charts and analysis, investors should buy weakness to my semiannual and annual value levels of $987.07 and $966.02, respectively, and reduce holdings on strength to my monthly risky level of $1,146.05. My quarterly pivot remains at $1,054.64. (For more, see: Alphabet Stock May Complete Long-Term Top.)