Internet content giant Alphabet Inc. (GOOGL) will report earnings after the closing bell on Thursday, Oct. 25. The stock closed Wednesday, Oct. 24, at $1,057.12, up just 0.4% year to date and in correction territory at 18.1% below its all-time intraday high of $1,291.44 set on July 27. The stock is 7.4% above its 2018 low of $984.00 set on March 26.
Analysts expect Alphabet to disclose earnings per share of $10.54 to $10.68 when the company reports third quarter results today. If the stock stays below my monthly and semiannual pivots at $1,098.23 and $1,101.14, respectively, a positive reaction to earnings is less likely.
Some say that Alphabet is feeling the pinch of direct competition from Amazon.com, Inc.'s (AMZN) fast-growing advertising business. Investors will also be focusing on Google's cloud business, hardware offerings, search and YouTube. While watching the first two games of Major League Baseball's World Series, I enjoyed the advertisements for the Google Pixel 3 phone and the YouTube participation in the programming.
The daily chart for Alphabet
The daily chart for Alphabet shows the importance of my monthly and quarterly pivots at $1,098.23 and $1,101.14, respectively. This zone has been tested ahead of earnings, as shown on the two horizontal lines in the middle of the chart. As a warning, the stock is below its 200-day simple moving average at $1,136.75, last tested as a barrier on Oct. 17. The higher horizontal line is my quarterly risky level at $1,233.39. The lower horizontal line is my annual value level at $966.02.
The weekly chart for Alphabet
The weekly chart for Alphabet is negative, with the stock below its five-week modified moving average of $1,148.55. The 200-week simple moving average, or "reversion to the mean," is at $851.30. The 12 x 3 x 3 weekly slow stochastic reading is projected to decline to 25.59 this week, down from 29.34 on Oct. 19.
Given these charts and analysis, investors should buy Alphabet shares on weakness to my annual value level of $966.02 and reduce holdings on strength to my quarterly risky level of $1,233.39. If there's a positive reaction to earnings, the stock should pop above my monthly and semiannual pivots at $1,098.23 and $1,101.14, respectively, which could put it back above the 200-day simple moving average of $1,136.75.