Trade of the Day: The Plan for Alphabet Inc (GOOGL) Stock After Earnings

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It’s a big week for earnings reports, and tech behemoth Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) will help kick things off after the close of trading today. The options market is implying that GOOGL stock will move about 43 points in either direction (up or down), which equates to about a 4%-4.5% move in percentage terms. That’s nice to know, but what may be a profitable trade setup we can sink our teeth into once the earnings have been reported? Let’s gain some perspective and map out a trading plan.

Trade of the Day: The Plan for Alphabet Inc (GOOGL) Stock Post-Earnings report

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Like I always say, much higher probability trades on average and over time set up once any given company has reported its earnings and an initial reaction in the stock has taken hold.

Positioning ahead of earnings reports in hopes of quick gains from an initial rally or sell-off in the stock over time is a losing strategy.

GOOGL Stock Trade Ideas


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To gain some perspective on GOOGL stock, let’s first take a peek at the multiyear chart. Here we see that not surprisingly and much like the Nasdaq 100 as represented by the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), the stock is trading at the very upper end of its multiyear trading channel. As such, GOOGL stock bulls in just about any time frame have to ask themselves if the current juncture provides good reward to risk odds to buy the stock.

Note that the MACD oscillator currently is at roughly the same overbought levels as in November 2015, where the stock struggled to push higher and in fact eventually corrected roughly 15% over the ensuing months.


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On the daily chart, note that while GOOGL stock over the past couple of weeks rallied close t0 9%, thus far this has merely pushed the stock back to the upper end of its two month trading range.

While a post-earning rally on Tuesday is entirely possible, the breakout of this nearer-term range would not seem sustainable through a multiweek/multimonth lens if we take into consideration where GOOGL stock currently trades on the bigger picture chart above.

This week I’ll be hosting a special webinar Wednesday, July 26 for InvestorPlace readers to explain how to turn trade setups such as the one currently in GOOGL into winning trades for monthly and quarterly income.

Once GOOGL stock reacts to the earnings report, I will be paying close attention to the eight- and 21-one day simple moving averages (blue and yellow lines respectively). Currently the blue line is trading above the yellow line. Note how the crossings of the blue line above and below the yellow line has signaled a near-term change in trend in recent months. In coming days and weeks I will be watching these lines closely, for if the blue line crosses back below the yellow line, a short-side trade in GOOGL would set up and likely will trigger a better mean-reversion move lower into the $850-$900 area as a first downside target.

Check out Serge’s Daily Market Outlook for July 24.

Take Serge’s quiz to find out which trading strategy best suits your personality.

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