While the rest of the market is rushing to new highs as the post-election Trump rally continues to roll, tech stocks seem reluctant to join in the trend. Even the big FANG names have lagged the market, with Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) in particular performing unevenly since peaking on Oct. 24 at $835.74.
Click to Enlarge Still, looking at the chart, the technicals are pointing to a bullish long-term trend, displaying a beautiful series of higher highs and lower lows.
The stock is starting to look very appealing as a short-term buy, too. Share prices came down to hit support around $750 twice in the past month, but both times GOOGL was able to hold above that key level.
It’s also worth pointing out that the stock is hovering well above its 200-day moving average (the blue line), which it only dipped below once in November despite the pullback.
On the fundamentals side, the company continues to grow the bottom line, and based on EPS estimates over the next four years, the stock could be earning over $61 per share by 2020.
With a price-earnings ratio of 20, that puts the stock price at $1,220. Granted, it will take some time for shares to work their way up that high, but it does exemplify the upside potential for GOOGL stock.
The pullback from the intraday high on Oct. 24 to the intraday low on Nov. 14 was 11.2%, which technically put GOOGL stock into correction mode. But when you take a step back and look at the bigger picture, this dip appears to be a fantastic buying opportunity.
Plenty of investors have proclaimed they would be an aggressive buyer of Alphabet if GOOGL would ease back a little. Now could be your chance.
Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com.
