You might love the products, but investing your time versus buying shares of Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) are two entirely different things right now. In fact, if the price chart and the other powers that be have any say in matters, it might be worth your time and money to short Google stock today.
Let me start by stating for the record, I’m a huge fan of Alphabet. I use Google searches constantly in my recreational and professional life and couldn’t get by without it. And YouTube? I spend more time watching video clips, documentaries, news and everything in-between than any other online medium for those types of content.
But Alphabet is not a Peter Lynch “buy what you know” style opportunity. As an investment today, I’d be wary of owning Google stock. Some of my own admitted slave-like behavior continues to be well-represented as a problem by authorities and antitrust proceedings against Alphabet and tech peers Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB). And quite frankly, it’s too early to be totally dismissive of what those powers might accomplish.
As well, with Alphabet already dropping the ball last quarter after issuing a weak earnings report and a price chart well-positioned for lower prices, the real value in Google stock is as a short for bearish traders.
Google Stock Weekly Chart
Earlier this month, conditions looked ripe for buying Alphabet. Shares were looking fairly attractive following a government-driven selloff. I dutifully wrote as much at InvestorPlace. But following a Google stock rally of two weeks, conditions have turned decidedly bearish. In my view, Google’s broadening or inverse triangle topping pattern looks to be in play once again.
The recent high in GOOGL filled a bearish price gap and failed to overcome resistance from the 200-day simple moving average. Now, this week’s turn lower has resulted in Alphabet shares establishing a weekly candlestick reversal pattern within the framework of a bearish flag within the price chart’s unfinished broadening pattern.
From current levels the expectation is the next meaningful leg will be for Google stock to break below the flag pattern and eventually fulfill the broadening top by testing pattern support, a 50% retracement level dating back to 2016 and the 200-week simple moving average.
This technical zone runs from approximately from $900 – $950. I’m unsure if Peter Lynch would be a buyer, but I’ll be watching for that kind of opportunity down the road.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.