Showing posts with label Alphabet (GOOGL). Show all posts
Showing posts with label Alphabet (GOOGL). Show all posts

Wednesday, July 12, 2023

Alphabet GOOGL Lagging Nasdaq 100

In early June Alphabet (GOOGL) started to diverge from the Nasdaq. Stocks like Microsoft (MSFT) and even Snapchat (SNAP) have continued to move higher.

There wasn't any major negative news for GOOGL but there wasn't comparative good news that keeps coming out for Microsoft. Microsoft Bing is a bit of a hub now with improved interface and AI image generator and ChatGPT-4 in creative mode that comes close to OpenAI on many things and equal to it on others.

Inflection AI had big news hit too about their $1.3 billion new investment. Inflection AI is working on LLMs similar to OpenAI's.

I think the market is just simply pricing in more future competition for Google. Over recent months Elon Musk was hinting at his own AI company too. They just officially announced X.AI today. I think that was getting priced into Alphabet stock too.

GOOGL stock price vs nasdaq

There are so many big players in consumer generative AI now. GOOGL doesn't deserve a monopoly valuation anymore with AI potentially disrupting much of our current notions of consumer tech and especially web searching. It won't happen overnight but as the mainstream starts using AI assistants more and more there will be slow shifts in behavior. I suspect whenever Apple launches a serious cutting edge AI assistant that will be a turning point. Elon Musk recently increased video uploads to 2 hours with up to 8GB file size capability for Twitter video uploads. Twitter with X Corp may be looking to seriously compete with Youtube. I added more puts on the move up today. I put on the August 4th $100 strike puts.

Wednesday, June 28, 2023

Alphabet GOOGL Rounding Top Pattern Signals

Last year I did another post on a rounding top pattern with energy ETF XLE. Those levels ended up being THE top in XLE last year.

I've been watching Alphabet (GOOGL) stock closely since I discovered AI chat bot search in the beginning of the year. My first use of AI LLM's was with ChatGPT from the OpenAI website. It really got interesting when I discovered Microsoft Bing's chat search. It was like Google on steriods because you can get much more focused results much more quickly. Google search now has viable competition that is superior in many ways.

How long it will take AI assistants to catch on to the masses is the question. Wallstreet is slowly catching on to this tech trend and is downgrading the stock as management hasn't fully given answers to how AI search is going to impact their searches. I still think the risk to the search moat is far more key here than how Google itself will change its search pages.

As I show this chart on GOOGL I will also explore rounding top pattern trading strategies and techniques.

Above we see a daily chart of Alphabet that highlights the formation. What happened is the price hit a wall of resistance at 126.43 first then attempted to breakout but failed at 129.04. It was a classic bull trap. A bull trap is when the stock appears to want to go higher as bulls jump in but quickly reverses and goes down instead. The breakout in this case was a "failed signal". Failed signals in trading markets can be much more powerful than a regular signal. It means many market participants got caught on the wrong side adding pressure to the reversal.

The next thing that happens with rounding tops is price starts to downtrend. We saw that beginning on 6/22 as price opened up lower than the previous days close. Support indicated by the bottom horizontal red line was broken from way back in May. One method of trading a support line is to simply short the stock when it goes below the key levels that make it up. With tech incredibly strong this year I thought it wise to wait for some kind of confirmation the stock was going lower first. I saw a retest of that support line as price tried to make it above it again. It failed two days in a row. It is now in a clear down channel as you can see in the second pic.

Personally, I don't use any indicators with rounding tops. I do use bollinger bands (20,2) with high momentum quick spiking stocks that are topping out. Those are spike tops or pipe tops. I like entering a trade around a clear stop level. Today as price touched the upper channel line there is a clear place to cut the trade if it breaks above the line. Cutting losses fast is smart as far as trading rules.

In summary, this is a textbook rounding top pattern here on GOOGL stock. I am bearish on Alphabet over the short-term and long-term.

Full disclosure: I am short GOOGL with put options.