Mega capitalization technology stocks came under pressure in the first quarter. Although technical support lines continue to hold for the time being for the Nasdaq 100 as represented by the PowerShares QQQ Trust (ETF) (NASDAQ:QQQ), at the very least, the volatility environment has changed. Active traders and investors will thus likely find more two-way trades in these names. To wit, shares of Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) now look to offer a bounce/buying opportunity for a trade.
As a reminder, one of the most challenging things to accept for traders and investors alike is that time-frame and thus timing matters. In other words, one’s longer-term analysis of any given stock might be spot on, but this can have next to nothing to do with any given tactical trading opportunity — long or short. It is thus imperative that one clearly separates the time-frame one operates in.
Case in point for GOOGL stock. Although I believe in this company’s longer-term growth story, my intermediate-term concerns are rising, yet for a tactical bounce trade, I also see good reward to risk.
Starting off with the multi-year weekly chart, we see that GOOGL stock more or less finished the first quarter of 2018 where it started.
Simple technical analysis shows us that GOOGL stock has some well-defined support around the $1000 area, which not only is a big round number but also coincides with both horizontal support as well as the yellow 50-week-simple-moving-average. A bounce for the stock in this area makes sense.
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
On the daily chart, we see that last week GOOGL stock showed signs of exhaustion on Wednesday March 28, which was followed by buying pressure on Thursday, March 29. While month and quarter-end trading activity certainly had something to do with this, the price action in my eye cannot be ignored, for a trade.
At the very least, traders here have well-defined support around the $1000 area against which they could try a trade to the long side for a bounce toward $1080 or $1100. Any bearish reversal that breaks below last week’s lows at the very latest would offer a stop loss signal.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
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